T-Mobile and Sprint announced their merger on Sunday, and on Monday a filing was made with the SEC which details the deal a bit more. There are a few important bits about this deal, including the fact that if the deal is blocked by regulators, neither party would owe the other anything. This is different from the AT&T/T-Mobile merger a few years ago, where regulators blocked it and T-Mobile came out with a rather large payday. However, there are some other circumstances that would require T-Mobile to pay Sprint around $600 million. That is still far less than what AT&T paid T-Mobile in its breakup – which was over a billion plus quite a bit of spectrum.
While both John Legere and Marcelo Claure, the CEO’s of T-Mobile and Sprint respectively, are fairly confident that the deal will be approved, there is still some uncertainty here. And making sure there is no breakup fee here is good for both parties, in case regulators do decide to kill this deal – which is still a possibility. Additionally, the deal says that neither Sprint nor T-Mobile can shop around for alternatives if the deal does fall through. So Sprint can’t shop around to Dish just in case the deal with T-Mobile doesn’t work out.
The deal was announced on Sunday, so neither CEO has begun working magic in Washington to get regulators to approve the deal down the road. That should be coming in the next few months. It’s also important to note that neither company stated when it expects the deal to close, officially. This is likely because both know that this is going to be a long process, with the review of both companies, and possibly some lobbying needing to be done in Washington to get the deal to close. Both Sprint and T-Mobile believe this is the perfect time to come together as one company, seeing as the current President has been dropping regulation across the board, making it easier for companies to make money and innovate in the US. That means that this is the best time to attempt a merger of the third and fourth largest carriers, to bring about a better competitor to AT&T and Verizon.