T-Mobile/Sprint Merger Approaches Finish Line

By: Henry Rademacher

The T-Mobile/Sprint merger is finally close to being completed. Yesterday’s ruling by Judge Victor Marrero in the Southern District of New York means that, after years of bureaucratic hurdles and meddling by activist attorney generals, one of the great “antitrust” sagas of the past decade is finally close to a conclusion. Fortunately, it will be a conclusion that benefits consumers and facilitates economic growth.

The merger between T-Mobile and Sprint has been approved by the Department of Justice and the Federal Communications Commission. It has been endorsed by President Trump. Also, it received a rousing endorsement from the stock market yesterday, when Sprint increased by 77% and T-Mobile experienced their largest single-day gain since 2012. 

As we have been saying for months, criticism of the merger was never really about antitrust concerns. It was about political grandstanding, divisive rhetoric, and irresponsible judicial activism. Once a merger has been approved by the responsible regulatory agencies, it is extremely uncommon for it to be challenged by a coalition of state attorney generals, as was the case with T-Mobile/Sprint. If that strategy had been successful in preventing the merger, it would have established a dangerous precedent on commerce issues. 

Rather than restate the reasons why the merger should be allowed to go through, lets focus on the benefits it will bring:

Will expediate the development of American 5G networks:

T-Mobile has spent years investing in 5G, with the goal of establishing a nationwide network that will allow them to compete effectively against the biggest names in the industry. The merger with Sprint will allow T-Mobile to be a viable competitor to Verizon and AT&T, who currently have many more subscribers and much higher revenue.

Many people are tired of hearing about 5G. They say it is just “faster internet” or a “marketing ploy.” It is neither. 5G is going to be a cornerstone of the global economy for the foreseeable future. Every business that creates new jobs will be using devices connected to 5G networks. Every innovator that wants to invent something is going to be using devices connected to 5G networks. Robust 5G networks will stimulate the economy, create jobs, and help the United States maintain its position as the innovation capital of the world. 

Will result in lower prices and improved service for consumers.

When burdensome regulations are removed from markets, prices go down and consumer satisfaction goes up. This is a basic reality of economics. The merger with Sprint will allow T-Mobile to dramatically increase its total capacity. This will provide a strong incentive for them to lower prices and allocate resources towards improving services and focusing on innovation that will benefit consumers. 

Will create new jobs. 

The merger will result in T-Mobile creating a lot of new jobs. The controversy generated by the merger provides a strong public relations incentive for T-Mobile to prioritize job creation. Also, building and maintaining a nationwide 5G network is something that requires a lot of boots on the ground. According to T-Mobile, they “expect to create over 12,000 new jobs to serve small towns and rural communities as a direct result of the transaction.” They also plan to build 600 new retail locations and five new customer experience centers.

The attempts by state attorney generals to block this merger were never really about antitrust issues. Opposing the merger provided an opportunity for politicians and activist judges to increase their name recognition while promoting anti-market agendas. Fortunately, their strategy failed, and the market will be allowed to function the way it is supposed to.

Judge Marrero did the right thing by approving the merger. It will benefit consumers, stimulate economic growth, and result in thousands of new jobs.

Photo credit: Prayitno (flickr)