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Colorado No Longer Opposes T-Mobile and Sprint's Merger

By Evan Niu, CFA - Oct 22, 2019 at 9:00AM

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One down, 16 to go.

The saga of T-Mobile (TMUS -0.74%) merging with Sprint (S) continues to drag on. The companies formally secured the Federal Communications Commission's blessing last week following a party-line vote, which was expected since three of the five commissioners had already voiced support for the proposed $26 billion merger. The last hurdle that T-Mobile and Sprint face is a multistate lawsuit filed by numerous state attorneys general that is seeking to block the deal on anticompetitive grounds.

The companies have been negotiating with states to address concerns, often making state-specific commitments to appease the prosecutors; Mississippi pulled out of the lawsuit earlier this month. Colorado has just done the same.

John Legere and Marcelo Claude sitting next to each other laughing

Image source: T-Mobile.

Committing to jobs and 5G

Colorado Attorney General Phil Weiser's office announced yesterday that it now supports the proposed deal after securing commitments from both T-Mobile and DISH Network (DISH -5.86%). As part of the agreement, DISH has committed to opening a new headquarters in the state that will have at least 2,000 full-time employees. DISH is already based in Englewood, a suburb of Denver, but the new facility would be for new wireless operations.

Colorado will be one of the first 10 states where DISH will deploy 5G by 2023 and faces $20 million in penalties if it fails to meet its commitments. T-Mobile has separately agreed to deploy 5G in Colorado within three years of the merger's close, while also expanding rural coverage and introducing new low-cost plans starting at $15 per month. The Un-carrier is on the hook for $80 million in penalties if it doesn't satisfy its obligations, meaning the tech companies face total combined potential penalties of $100 million.

As part of the settlement with antitrust regulators at the Department of Justice, T-Mobile and Sprint have agreed to help enable a fourth carrier to be created in an effort to preserve competition. T-Mobile CEO John Legere is expectedly pleased about the news.

"The State of Colorado joined a multistate lawsuit to block the T-Mobile-Sprint merger because of concerns about how the merger would affect Coloradans," Chief Deputy Attorney General Natalie Hanlon Leh said in a statement. "The agreements we are announcing today address those concerns by guaranteeing jobs in Colorado, a statewide buildout of a fast 5G network that will especially benefit rural communities, and low-cost mobile plans." Weiser had recused himself from the negotiations.

With Colorado's exit from the lawsuit, that leaves 16 attorneys general representing 15 states and the District of Columbia still fighting the merger.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

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Stocks Mentioned

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
$145.55 (-0.74%) $-1.08
Sprint Corporation Stock Quote
Sprint Corporation
DISH Network Corporation Stock Quote
DISH Network Corporation
$18.33 (-5.86%) $-1.14

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