• FCC Approves T-Mobile-Sprint Merger



    WASHINGTON (Reuters) - T-Mobile US Incís (TMUS.O) proposed $26.5 billion tie-up with Sprint Corp (S.N) won formal approval from the Federal Communications Commission on Wednesday in a vote split along party lines, two sources told Reuters.

    Chairman Ajit Pai and two Republican commissioners voted to approve the deal while two Democratic commissioners voted against it, the sources said.

    The text of the approval order is not expected to be released until later in the month.

    The deal to combine the third and fourth largest U.S. wireless carriers, which has been fighting for government approval since April 2018, still faces a lawsuit brought by a group of state attorneys general, headed by New York.

    The lawsuit against Sprint and its parent company Softbank Group Corp and T-Mobile and its parent Deutsche Telekom AG argues the deal will lead to higher prices for consumers. A trial date has been set for Dec. 9.

    The U.S. Justice Department approved the deal in July.

    Under the Justice Department deal, the companies would divest Sprintís prepaid businesses, including Boost Mobile, to satellite television company Dish Network Corp (DISH.O), and provide it with access to 20,000 cell sites and hundreds of retail locations. That deal is worth about $5 billion.
    Source: Reuters

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    Andrew Currie has been blogging about mobile phones since 2001, smartphones (depending on how you define them) since 2002 and smartwatches since 2014.
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    This article was originally published in forum thread: FCC Approves T-Mobile-Sprint Merger started by acurrie View original post
    Comments 116 Comments
    1. bobdevnul's Avatar
      bobdevnul -
      Quote Originally Posted by shilohcane View Post
      So who is going to pay the banks that loaned of over $40 Billion where Sprint used their spectrum and other Sprint assets as collateral to cover their loan in case Sprint defaults on their load....
      If someone buys Sprint, they buy the liabilities along with the assets. What would happen with loans and bonds would follow the normal course of business law.

      Ownership of Sprint, as a publicly traded stock corporation, is by ownership of the of the stock. Softbank owns 84% of Sprint stock and completely controls selection of the board of directors and corporate executives members. By controlling the management Softbank controls the business decisions.

      That is all probably academic. I don't expect there will be another buyer.
    1. bobdevnul's Avatar
      bobdevnul -
      Quote Originally Posted by Jack Hagar View Post
      You're assuming Softbank is willing to sell Sprint for $10 bil. Say my car is worth $12,000 but I want $20K you can show all the proof that it's only worth $12K but if I want $20K then I want $20K. No one will buy it but maybe I don't care unless I get what I want.
      Yes, of course, it would depend on Softbank being willing to sell at any given price. Selling at $10 billion would be a desperation, cut their losses, move.

      I would expect Softbank to explore all their options to get the best deal they can. Chapter 11(?) reorganization with renegotiation and/or forgiveness of debt could be a possibility.

      By accepting the T-Mo deal Softbank has indicated that they no longer want to try to operate Sprint as a profitable business. I assume that they believe that the probability of success is too low for the amount of additional investment that would be required.

      I don't believe that any of this will be necessary. The deal is approved by the federal government. The states objections will be placated or dismissed in court.
    1. jet1000's Avatar
      jet1000 -
      Quote Originally Posted by bobdevnul View Post
      I would expect Softbank to explore all their options to get the best deal they can. Chapter 11(?) reorganization with renegotiation and/or forgiveness of debt could be a possibility.
      It however isn't a possibility for Softbank. The issue with a Chapter 11 and debt forgiveness is that Softbank (and other Sprint shareholders) would lose their equity in the company and the debt-holders would gain equity in place of the money they are owed. Chapter 11 could keep Sprint open and running as an entity. But the ownership typically changes hands in those situations.
    1. bobdevnul's Avatar
      bobdevnul -
      Quote Originally Posted by jet1000 View Post
      It however isn't a possibility for Softbank. The issue with a Chapter 11 and debt forgiveness is that Softbank (and other Sprint shareholders) would lose their equity in the company and the debt-holders would gain equity in place of the money they are owed. Chapter 11 could keep Sprint open and running as an entity. But the ownership typically changes hands in those situations.
      Interesting. I am not an expert on chapter whatever deals.

      All the more reason that Softbank wants the deal they agreed to with T-Mo.

      Note that the deal is for Softbank/Sprint to get ~$26 billion of T-Mo stock, not cash. IIRC, they also get a seat on the BOD. The T-Mo stock and one board member does not give them control of the "New T-Mo".
    1. Greenmule's Avatar
      Greenmule -
      In 1996 a company called Nextwave Wireless bought $4.7 billion of PCS licenses at an FCC auction. They made the required $500 million down payment
      but soon thereafter defaulted on the payments and filed bankruptcy.

      The FCC tried to confiscate the licenses in 2001, but Nextwave Wireless prevailed in 2003 in an 8-1 US Supreme Court decision. They kept the licenses and emerged from bankruptcy with working capital. Somewhere along the way, AT&T bought them--2012, I think.

      Anyway, point is, if Sprint goes into bankruptcy, the FCC cannot confiscate their spectrum licenses.

      https://supreme.justia.com/cases/federal/us/537/293/
    1. DRNewcomb's Avatar
      DRNewcomb -
      Quote Originally Posted by Greenmule View Post
      .........The FCC tried to confiscate the licenses in 2001, but Nextwave Wireless prevailed in 2003 in an 8-1 US Supreme Court decision. ....
      Due to what ammounted to a bone-headed clerical mistake made by the FCC and not repeated.
    1. Greenmule's Avatar
      Greenmule -
      Quote Originally Posted by DRNewcomb View Post
      Due to what ammounted to a bone-headed clerical mistake made by the FCC and not repeated.
      I can't speak to clerical errors at the FCC. If one clicks on the link and directly beneath the case title, clicks on Audio Media, then one can listen to Antonin Scalia read his opinion announcement, about 5 min 44 sec.

      Based on what I heard and listened to the spectrum licenses will stay in Sprint's control until Sprint sells them or somone buys Sprint.

      Facts of the case

      After the Federal Communications Commission (FCC) auctioned off certain broadband personal communications services licenses to NextWave Personal Communications, Inc., Nextwave filed for Chapter 11 bankruptcy protection and suspended payments to all creditors, including the FCC. The FCC asserted that NextWave's licenses had been canceled automatically when the company missed its first payment-deadline and announced that NextWave's licenses were available for auction. Ultimately, when the FCC denied NextWave's petition for reconsideration of the license cancellation, the Court of Appeals for the D. C. Circuit held that the cancellation violated 11 USC section 525(a), which provides that a "governmental unit may not...revoke...a license...to...a debtor...solely because such...debtor...has not paid a debt that is dischargeable in the case."
    1. shilohcane's Avatar
      shilohcane -
      Quote Originally Posted by jet1000 View Post
      It however isn't a possibility for Softbank. The issue with a Chapter 11 and debt forgiveness is that Softbank (and other Sprint shareholders) would lose their equity in the company and the debt-holders would gain equity in place of the money they are owed. Chapter 11 could keep Sprint open and running as an entity. But the ownership typically changes hands in those situations.
      Correct the debt holder get Sprint assets including the spectrum. Where does Sprint get the money to pay their people if they are a negative $270 Million per quarter and customers are leaving in mass if they try to stay in business? No one will loan them more money. Top that off with lifeline fraud that is like in the neighborhood of $4 B to $5 Billion in fines unless they cut Sprint a break $4K per incident fine.

      I am starting to not care about December 9th merger trial since I don’t see Sprint in business very long if the merger fails. T-Mobile should be able to get some of the 2.5Ghz spectrum in Sprint’s bankrupt sales. Then there is the FCC C- Band auction and tons more mmWave spectrum. Also, with out the merger Dish has until March 2020 to build out 70% coverage or risk the FCC taking back some of there spectrum. Without the merger Dish will never build out a new network and at some point sell their spectrum. Then there will be only three networks in the end despite what happens on December 9th trial.
    1. Jack Hagar's Avatar
      Jack Hagar -
      Quote Originally Posted by shilohcane View Post
      I am starting to not care about December 9th merger trial since I donít see Sprint in business very long if the merger fails. T-Mobile should be able to get some of the 2.5Ghz spectrum in Sprintís bankrupt sales.
      Which could take years and T-Mobile likely to get less than what they will have had by merging

      Then there is the FCC C- Band auction and tons more mmWave spectrum.
      C-band hasn't even been settled yet how that will work. Auction might not take place until late 2020. Looks like 280 MHz up for sale, so 100 MHz, 100 MHz, 80 MHz assuming the only winners are the big 3. And T-Mobile is likely to be the 80 Mhz. Is that going to be enough? Also not quite as good as 2.5 GHz. There is also a CBRS auction which T-Mobile might participate in without the merger and with only 70 MHz up for auction I'd rather T-Mobile sit that one out than divide 70 MHz up 3 ways or possibly more. If they have Sprint's 2.5 GHz they are unlikely to do more than to bid just to get at&t and Verizon to pay more, but not actually buy.


      Also, with out the merger Dish has until March 2020 to build out 70% coverage or risk the FCC taking back some of there spectrum. Without the merger Dish will never build out a new network and at some point sell their spectrum. Then there will be only three networks in the end despite what happens on December 9th trial.
      If the judge in January decide to kill the merger you think the FCC is going to hold Dish to that March 2020 deadline? Even if they did it could be years before that spectrum is re-auctioned.
    1. shilohcane's Avatar
      shilohcane -
      Quote Originally Posted by Jack Hagar View Post
      Which could take years and T-Mobile likely to get less than what they will have had by merging



      C-band hasn't even been settled yet how that will work. Auction might not take place until late 2020. Looks like 280 MHz up for sale, so 100 MHz, 100 MHz, 80 MHz assuming the only winners are the big 3. And T-Mobile is likely to be the 80 Mhz. Is that going to be enough? Also not quite as good as 2.5 GHz. There is also a CBRS auction which T-Mobile might participate in without the merger and with only 70 MHz up for auction I'd rather T-Mobile sit that one out than divide 70 MHz up 3 ways or possibly more. If they have Sprint's 2.5 GHz they are unlikely to do more than to bid just to get at&t and Verizon to pay more, but not actually buy.




      If the judge in January decide to kill the merger you think the FCC is going to hold Dish to that March 2020 deadline? Even if they did it could be years before that spectrum is re-auctioned.
      Remind me again how much 600 MHz that Verizon bid on in that auction and all the 600 MHz that AT&T still owns after they won about a billion dollars of Band 71 spectrum. Zero, zip none. AT&T has a lot of debt from their failing DirectTV, HBO and CNN. T-Mobile will get lots of extra spectrum since there is just so much spectrum available now and the price keeps dropping due to just to total amount of spectrum for only three National Networks.
    1. DRNewcomb's Avatar
      DRNewcomb -
      Quote Originally Posted by Greenmule View Post
      I can't speak to clerical errors at the FCC. .....
      What happened is that the FCC neglected to "perfect the lien" by publishing it in the Federal Register. Without a valid lien, the FCC lacked legal basis for repossessing the licenses.
    1. Jack Hagar's Avatar
      Jack Hagar -
      Quote Originally Posted by Greenmule View Post
      In 1996 a company called Nextwave Wireless bought $4.7 billion of PCS licenses at an FCC auction. They made the required $500 million down payment
      but soon thereafter defaulted on the payments and filed bankruptcy.

      The FCC tried to confiscate the licenses in 2001, but Nextwave Wireless prevailed in 2003 in an 8-1 US Supreme Court decision. They kept the licenses and emerged from bankruptcy with working capital. Somewhere along the way, AT&T bought them--2012, I think.

      Anyway, point is, if Sprint goes into bankruptcy, the FCC cannot confiscate their spectrum licenses.

      https://supreme.justia.com/cases/federal/us/537/293/
      Licenses are not granted in perpetuity
    1. Jack Hagar's Avatar
      Jack Hagar -
      Quote Originally Posted by shilohcane View Post
      Remind me again how much 600 MHz that Verizon bid on in that auction
      none. and what's your point?

      and all the 600 MHz that AT&T still owns after they won about a billion dollars of Band 71 spectrum.
      They sold theirs for about what they spent at auction

      AT&T has a lot of debt from their failing DirectTV, HBO and CNN. T-Mobile will get lots of extra spectrum since there is just so much spectrum available now and the price keeps dropping due to just to total amount of spectrum for only three National Networks.
      what does you post have to do with mine? Do not drink and post on the internet
    1. Greenmule's Avatar
      Greenmule -
      On OCT/23/2019, DISH, Softbank and Deutsche Telekon all three filed petitions to the New York court where the opposition case to the Sprint buyout is being tried.

      The link below provides a listing to most of the motions/petitions that have been files in the case. The motions are listed in date order, oldest first.

      https://www.courtlistener.com/docket...he-telekom-ag/

      This is the crux of those motions:

      The Court should reject the Opposition States’ eleventh-hour attempt to delay public interest review of the Settlement. Delay would only harm consumers, the parties, and DISH, which has no forum other than this Court to address its interests. Delay provides this Court with no additional information necessary to discharge its statutory mandate under the Tunney Act. And the Opposition States’ purported interest in judicial economy self-servingly depends entirely on their success in enjoining the Merger and mooting these proceedings. If they fail to do so, they would undoubtedly burden this Court’s time and resources to re-litigate their claims here

      perhaps Deutsche Telecom and Softbank made a legal tatical error by waiting for unanimous approval. Once the 60-day comment period was over, and there was a proposed final judgement, perhaps they should have pressed for closure then.
    1. hwertz's Avatar
      hwertz -
      Quote Originally Posted by Greenmule View Post
      perhaps Deutsche Telecom and Softbank made a legal tatical error by waiting for unanimous approval. Once the 60-day comment period was over, and there was a proposed final judgement, perhaps they should have pressed for closure then.
      Possibly. One risk to that i could think of, a lot of state PUCs (Public Utility Commissions) are essentially administrative, they make sure the dues are paid and paperwork is in order. A few states do have fairly active PUCs and could perhaps make things difficult for T-Mo, perhaps by denying (or delaying until state lawsuit is settled) permits for site changes.

      If the remaining states are just looking for concessions similar to the first few, it might just be easier (and better PR) to negotiate with the rest. To summarize, Mississippi got coverage guarantees of 5G network buildout, Colorado got buildout guarantees and two low-priced data plans (unlimited talk & text, 2GB data for $15 or less and 5GB for $25 or less).

      600mhz is a huge deal here in Iowa... IWireless (who T-Mobile bought last year) built a statewide PCS network with those 1900mhz sites spaced just about as far apart as possible, with all the indoor coverage problems etc. that implies. With no MetroPCS in the local market, IWireless basically took the place of MetroPCS in a market where the T-Mobile coverage is not so solid. Likely they are running off the 850mhz cell towers that've dotted the state since the 1980s. Well the 850 carriers here (US Cellular and Verizon Wireless) have pretty good coverage, so running off these sites at 600 should really be solid . I could see T-Mo in this area poaching off some US Cellular and VZW customers now that they'll also have decent coverage.
    1. shilohcane's Avatar
      shilohcane -
      Quote Originally Posted by Jack Hagar View Post
      none. and what's your point?



      They sold theirs for about what they spent at auction



      what does you post have to do with mine? Do not drink and post on the internet
      You act like T- Mobile won’t be able to get much spectrum in the future since they will be outbid. AT&T is also deep in debt from their Mexico network and all the other media companies that aren’t doing well including DirecTV. AT&T has to pay dividends in stock or they will have a massive amount of people selling their stock. T-Mobile can and will be able to complete head to head with Verizon and AT&T for resources and customers.
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