T-Mobile is said to win court’s nod for Sprint takeover
T-Mobile US is poised to win court approval for its $26.5 billion takeover of Sprint, according to a person with knowledge of the matter, defeating a state-led lawsuit that sought to block the industry-altering wireless deal.
U.S. District Court Judge Victor Marrero in Manhattan is expected to rule as soon as Tuesday morning, said the person, who asked not to be identified discussing the case. The judge’s office informed both sides earlier Monday that he was ruling in favor of the companies, the person said.
The decision is a huge win for T-Mobile and its owner Deutsche Telekom as well as SoftBank Group, Sprint’s parent. The combined company, which will operate under the T-Mobile name, will have a regular monthly subscriber base of about 80 million — in the same league as AT&T Inc., which has 75 million subscribers, and Verizon Communications Inc., which has 114 million.
The deal is also a victory for Dish Network Corp. co-founder and Chairman Charlie Ergen, who is buying assets from the two carriers to set up a new wireless network. With his company’s core satellite TV business in decline, Ergen has amassed a trove of airwaves to build a state-of-the-art network.
Shares of Sprint soared as much as 70% to $8.16 in extended trading. The stock closed at $4.80 Monday in New York. T-Mobile rose as much as 12% to $93.99
T-Mobile and the New York Attorney General’s office, which led the state lawsuit with California, didn’t immediately respond to requests for comment. Dish and Sprint declined to comment.
After the merger, T-Mobile will have more spectrum — the frequencies through which wireless signals are transmitted — than any other carrier. This larger capacity will give the combined company an advantage as the industry transitions to the next generation of wireless technology, the much-faster 5G standard.
The court victory comes almost two years after the deal was first announced. The states’ lawsuit was the last major hurdle to the deal after it secured the blessing of regulators at the Federal Communications Commission and Justice Department’s antitrust division. It still needs approvals from California’s utility board and a federal judge in Washington who must sign off on the Justice Department settlement.
To win federal approval, T-Mobile and Sprint had agreed to sell multiple assets to Dish in order to create a new fourth competitor. The new Dish wireless network will start life with about 9 million subscribers.
T-Mobile and Sprint had been the most aggressive U.S. wireless companies in terms of price competition in recent years, forcing AT&T and Verizon to follow moves like ending service contracts and adopting unlimited data plans. The proposed combination came under fire from lawmakers and consumer advocates who said it would lead to higher prices and fewer services, especially for poor and rural consumers.
The companies had pursued a combination for several years, but a proposed deal was twice rejected as anti-competitive under the previous administration. After the FCC approved the deal, the all-Democratic group of attorneys general filed suit. The Justice Department then gave its approval, leading to a rare split between states and the federal government over antitrust enforcement.
“This is exactly the sort of consumer-harming, job-killing mega-merger our antitrust laws were designed to prevent,” New York Attorney General Letitia James said at the time.
T-Mobile Chief Executive Officer John Legere tried to address these concerns by promising to not raise prices for three years.
Legere the shaggy-haired self-styled industry rebel helped remake T-Mobile into an industry maverick, and pitched the Sprint takeover as a way to compete against industry leaders Verizon and AT&T.
He announced in November that he will be handing off the job to Chief Operating Officer Mike Sievert in May, but plans to remain on the combined company’s board.
One of their central pitches was that the deal would advance the introduction of 5G. The companies pledged to FCC Chairman Ajit Pai in May that they would deploy a 5G network covering 97% of the U.S. population within three years and 99% within six.
More must-read stories from Fortune:
—The strange tale of Jeff Bezos’s $16,840 parking ticket bill
—Post-Brexit U.K.’s surveillance practices could spell problems for business
—Governments deploy surveillance tech to track coronavirus victims
—How marketers are increasingly using A.I. to persuade you to buy
—Predicting the biggest tech headlines of 2020
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.