The FCC is expected to complete is examination of the T-Mobile/Sprint deal in early April of next year, and T-Mobile hopes to close the transaction promptly in the second quarter of 2019, Braxton Carter, chief financial officer and EVP of T-Mobile told the Morgan Stanley Tech, Media & Telecom 2016 conference in Barcelona last week.
In its quest to receive regulatory approval of the Sprint acquisition, T-Mobile has provided millions of pages of documents to the Department of Justice, plus a 600-page public interest statement that it filed with the FCC. T-Mobile has met with the Committee on Foreign Investment in the United States, the state public utility councils, and numerous Senators and congressional representatives, among others, in its campaign for approval. The carrier has now begun depositions with the DOJ, which are expected to conclude by the end of the year.
“We’re very optimistic. They’ve been open to listening to the arguments,” Braxton said, according to Seeking Alpha transcript. “They’ve been extremely engaged in asking questions, and they are in full analysis mode at this point.”
If the merger is approved, T-Mobile will begin the three-year, $15 billion process of shutting down the Sprint network using the T-Mobile’s network as the anchor. Sprint has more than 20 million compatible handsets that could operate on the T-Mobile network, which will be migrated over on a geographic basis as the Sprint network is shut down.
The combination of spectrum holdings, resulting network scale, and expected run rate cost synergies of $6+ billion will result in a net present value (NPV) of $43+ billion, according to T-Mobile. “But once you get past that [transition] cost to achieve and unlock that synergy and eliminate all that ongoing cost, which is massive, that’s what’s providing majority of the $43 billion,” Carter said.
As AGL eDigest has reported before, the merger will touch of flurry of activity. The new company will invest $40B in the network but will also decommission 35,000 macrosites and add 10,000 towers and 50,000 small cells. In sum, 110,000 macro sites will be reduced to 85,000 towers, according to T-Mobile US CEO John Legere. “About $26B of the $43B [in synergy from the merger] is from network: site decommissioning and site avoidance,” Legere said.
Full Steam Ahead at 600 MHz
Not distracted by the merger, T-Mobile is pushing forward with its 600 MHz network build out, which has topped 291MM POPs and will “close the gap” with Verizon’s 325MM POP footprint by the end of the year.
“A lot of the investment going on with the 600 megahertz is 5G-compatible hardware,” Carter said. “We’re going to get a lot of efficiency with that build in connection with our ultimate 5G rollout. So, a lot of great things happening.”
Creating a Business Model for Rural Fixed Wireless
Carter also reiterated T-Mobile’s commitment to building out a fixed wireless network in underserved rural areas, using its combined spectrum assets with Sprint.
“And we’re very committed, as part of NewCo and the combined spectrum assets, to really exploring and bringing that competition into America,” Carter said. “But the unique assets, the combination of Sprint and T-Mobile actually provide us assets where we can go very, very heavy in this area. And we think there’s many billions worth of NPV that can be created with that business model, and we’re excited about it.”