The Federal Communications Commission formally approved T-Mobile Us Inc (NASDAQ:TMUS) acquisition of Sprint Corp (NYSE:S). This merger is valued at $126 billion. Despite consistent opposition from consumer advocacy groups and attorney generals, this is a big win for both companies.
It is believed that this merger will bring significant transformation to the US wireless industry. The industry has been recently characterized by stiff competition in pricing and contracts.
Analysts claim that the future of the industry may seem uncertain given the merger of these companies; third and fourth largest companies in the wireless industry. The merger starts with the reintroduction of unlimited plans and the abolishment of early termination fees. It was welcomed by the majority of the FCC’s Republicans, who remain hopeful that this collaboration will spur the use of high-tech 5G networks.
Ajit Pai, the Chairman of FCC, said that this deal has the potential to boost US leadership in rolling out of the 5G and close the digital bridge that exists in rural America. He also added that this would increase competition in the broadband industry, which is good for the customers.
Critics Of The Merger
Other parties were critical of the deal. Jessica Rosenworcel claimed that the merger could end the golden age of wireless. Ion the other hand, Geoffrey Starks commented that FCC did not conduct a thorough analysis since this deal can potentially increase the wireless prices, which will significantly affect the American with low income in the urban areas.
T-Mobile committed to boost mobile, spin off the prepaid subsidiary owned by Sprint and ensure countrywide coverage with high-speed wireless internet. However, Starks argued that these commitments were not warranted, and he doubted the extent T-Mobile will improve the spread of 5G more than it is currently.
Notably, although the merger has received the green light from the Justice Department and FCC, a coalition of states has gone to court to oppose the merger. The case is set for next month. The two companies are confident in the merger and have stated that the merger will be actualized after the court closes the case.
