The Federal Communications Commission formally blessed T-Mobile US Inc.’s proposed purchase of Sprint Corp., publishing its order approving the merger of the nationwide carriers passed by commissioners in a closed-door vote last month.
The wireless combination still needs to clear a court challenge brought by states. It was approved by the FCC on a 3-2 Republican-led vote Oct. 16, and publication of the order was delayed.
“The transaction will help secure United States leadership in 5G, close the digital divide in rural America, and enhance competition in the broadband market,” FCC Chairman Ajit Pai said Tuesday in a statement.
The $26.5-billion deal won Justice Department approval in July as the carriers agreed to sell airwaves to Dish Network Corp. for a new, fourth wireless company to bolster competition once Sprint folds into T-Mobile.
T-Mobile and Sprint have agreed not to close their deal until after a decision in a multi-state lawsuit. A trial is set for early December.
The states say the combination of the third- and fourth-largest U.S. wireless providers would decrease competition and raise prices in a market that’s already concentrated. The deal’s backers say it would quickly bring advanced 5G networks and create a stronger rival to leaders AT&T Inc. and Verizon Communications Inc.
The FCC, in its order, pushed back against claims that the deal would harm consumers.
“The transaction would not substantially lessen competition,” in part because low-cost provider Boost Mobile would be divested to Dish Network Corp., which also receives network access and retail stores to form a new competitor, the FCC said in the order.
The two FCC Democrats voted against the merger, saying it is bad for consumers.
“The most likely effect of this merger will be higher prices and fewer options for all Americans,” Commissioner Geoffrey Starks said in an emailed statement. “It will establish a market of three giant wireless carriers with every incentive to divide up the market, increase prices and compete only for the most lucrative customers.”
T-Mobile Chief Executive John Legere — who remade T-Mobile into a maverick competitor by eliminating annual contracts and offering unlimited data plans — disputes that prices would go up. He insists that by buying Sprint, his company would be able to better compete against industry leaders Verizon and AT&T, all to the benefit of U.S. consumers.
Sprint and T-Mobile are within reach of completing a deal that they have flirted with for years. In 2014, top officials at the Justice Department and the FCC rebuffed an effort by the companies to combine. The carriers returned in 2018, hoping for a more favorable reception from appointees of the Trump administration.
The approval published Tuesday also cancels Dish’s March 7 deadline to use some of its airwaves. Dish had started work on a narrow-band network to satisfy the use-or-lose requirement, which could have forced the company to give up some of its airwave licenses.
As part of the deal, Dish is committed to cover at least 20% of the U.S. population with 5G broadband by June 14, 2022, and 70% of the population by 2023.
T-Mobile shares rose 0.7% on Tuesday. Sprint shares slipped 0.2%.