What you need to know
- The $5 billion deal would set Dish up to create a new wireless carrier in the U.S. and ease Justice Department concerns over the T-Mobile and Sprint merger.
- Dish would pay $1.5 billion for prepaid mobile business and $3.5 billion for wireless spectrum.
- The T-Mobile and Sprint merger would still need to get approval from the Justice Department and FCC.
According to Bloomberg, Dish has just agreed to pay $5 billion to T-Mobile and Sprint for wireless spectrum and prepaid phone business. This deal would put the T-Mobile and Sprint merger one step closer to approval, and set Dish up to become a new mobile wireless competitor.
As part of the deal, Dish is agreeing to pay $1.5 billion for the prepaid mobile business and $3.5 billion for wireless spectrum. Dish would also agree to not sell off any assets or give control to a third-party for three years — an agreement which comes in fears of Dish being in talks with Google to help create a new wireless carrier.
The agreement would also allow Dish to sell T-Mobile wireless service under the Dish brand for seven years, along with requiring T-Mobile to provide support for prepaid customers transitioning to Dish.
After nearly a year of working to make the Sprint and T-Mobile merger happen, the biggest obstacle standing in the way has been the concerns from the Justice Department over lack of competition. Allowing T-Mobile and Sprint to merge would have left the U.S. with three mobile carriers instead of four, and possibly lead to worse deals for consumers.
With a deal on the table allowing for Dish to create a fourth carrier, it should ease the concerns of the Justice Department and encourage it to approve the $26.5 billion merger between T-Mobile and Sprint.
However, even if T-Mobile and Sprint get approval from the Justice Department, the battle still won't be over. Currently, there are several states fighting the deal in fears of less competition and higher prices.