With the federal judge approval of the $26.5B merger between the T-Mobile and Sprint, the wireless infrastructure industry in the States’ Attorney General lawsuit, it would appear, has had a giant weight taken from its back after two years of uncertainty. For those wireless services vendors that closed their doors waiting for payments, today is probably a bittersweet moment. But for most in the industry, the decision by U.S. District Judge Victor Marrero to clear the way for a merger of the No. 3 and No. 4 wireless carriers invites excitement at the possibilities.
“We genuinely believe that this deal paves the way for T-Mobile to fundamentally disrupt the U.S. wireless market. It eases the path for Dish to do the same,” wrote Jonathan Chaplin, New Street Research.
The “New T-Mobile” will be a positive for towers because of abundance of spectrum that will need to be deployed, including small cells, according to Jennifer Fritzsche, senior analyst, Wells Fargo Securities. “We expect to see ramp in TMUS spend in 2H20. Also–with deal close it brings DISH to spending table,” she wrote.
“The news this week of a favorable merger ruling provides much needed clarity in the industry,” said Todd Schlekeway, NATE executive director. “NATE and our 930 member companies are optimistic that this T-Mobile/Sprint merger news will ultimately lead to increased carrier and vendor spending investments that are necessary in order to build, install and maintain the next generation networks and related infrastructure that are so critical to the 5G deployment cycle in the United States.”
AT&T, which offers both content and network, will have to step up its network game since it now face two competitors that are network focused, according to Iain Gillott, principal, iGR Research. “Network is king. T-Mobile also needs to step up and show that the integrated network with Sprint works,” he said.
Is it Really a Done Deal?
What’s next? There are some other actions that must be taken before the merger can close. First, the states could appeal the decision. Also the California Public Utility Commission (CPUC) still needs to rule on the merger.
The states [are] unlikely to appeal but may still engage in negotiation, according to Levin. Blair Levin, New Street Research, and the CPUC will be moved to approve the merger with out delay.
Gillott still voiced a sense of uncertainty, based on the time that the deal has taken to be completed, because no one thought this deal would take two years to be completed.
“While the judge has approved it, the ink is not dry on the paper yet. Dish still needs to buy Sprint’s MVNO [mobile virtual network operator] business,” he said. “Sprint has been operating in limbo, which changes the dynamics. It will be interesting to see how quickly they close the deal and how quickly T-Mobile can integrate the two networks?”
If all goes well, however, Gillott expects the wireless industry to roll up its sleeves and begin work on the network, which would mean a spike in activity in the second half of 2020.
5G Mid-band Spectrum Dynamics
With T-Mobile getting Sprint’s 2.5 GHz spectrum, the fire is now lit under AT&T and Verizon to secure their claim to mid-band spectrum for 5G. Hopes that the C-band spectrum would be freed up quickly were dashed by the FCC’s decision to go to a public auction that will take place probably early next year. That places new pressure on the June 25th Citizens Broadband Radio Service Priority Access License (PAL) spectrum auction at 3.5 GHz.
“If the Sprint/T-Mobile merger had been blocked, Verizon and AT&T might have bought 2.5 GHz band spectrum from Sprint,” Gillott said. “But with the CBRS PAL auction as the next opportunity for mid-band spectrum, now you have the attention AT&T and Verizon. That 3.5 GHz spectrum is now a prime target for those two carriers.”
One carrier can only buy four of the seven 10 megahertz slots in each county. AT&T has said they want it for rural coverage, and Verizon has said they want it for capacity offload in urban and suburban areas, but those strategies may change, Gillott said.
More Bad News for Barcelona
So far, Sony, LG, Intel, Ericsson, CommScope have announced they aren’t going to the Mobile World Congress. The timing of the Judge’s decision with multiple defections from the Mobile World Congress may cause more people to think twice before boarding the plane to Barcelona.
“If I am a vendor in the United States with T-Mobile as a client, I am focused more on Seattle than Barcelona. Maybe they should be securing their future in Seattle,” Gillott said. “The risk is having your employees get sick and possibly die, but the other risk for a T-Mobile vendor is having them quarantined in Barcelona if someone gets sick at the show. It could be very costly to a contract with T-Mobile.”
Verizon, AT&T and T-Mobile are now set as the key carriers for the foreseeable future. For wireless vendors, now is your time to secure your future, Gillott said.