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Explore the T-Mobile and Sprint mega merger in the US telecom industry. Understand the driving forces, antitrust issues, and the impact on market concentration.

This article explores the merger between T-mobile and Sprint in the telecom industry. Highlighting the mega driving forces of such merger, issues of antitrust laws which reference to the ruling of the U.S judge Victor Marrero. This article will first outline certain background concepts necessary to understand why – the merger,  focus on various driving forces with Judge Victor Marrero’s ruling, violation Section 7 of the Clayton antitrust act by excess HHI (Herfindahl-Hirschman Index ) in market concentration and collusion. 


The path to the 5G network, with each subsequent “G”, from voice and data to hyperactivity between things and people, has brought immense technological capabilities. As the upcoming network technology has advancements such as speed up to 200x faster than existing networks, lower latency, the ability for network slicing and added many functions to our mobile phones which seemed unimaginable, if we trace back to the first launch of the mobile cellular network in Japan in the year 1979. Many new independent cellular companies emerged with the Telecom Act 1996, as this act loosened federal regulation of the telecom industry, making it easier for companies to buy each other out as a result of which a handful of conglomerates dominating industries and smaller companies merged that were previously separated by telecommunication regulations. 

Looking at the advanced capabilities, it is important to understand that 5G is an enabling technology ( direct connectivity between UE, enhances data offloading and data aggregation, increases network capacity and user experience and controls activity for providing good QoS in the measurement of traffic). Due to which it requires multiple complementary other technologies to come along to support different real-time multimedia, which are not in place yet. Based on the network technology standard, hardware is built as chipsets, handsets (like smartphones and tablets) and base stations. The said technology requires massive investments and to save cost of operation. Mergers between telecom companies have always acted as a valuable lever in building new digital business models or facilitating digital transformation. Hence, the Mobile network operators (MNOs) consolidated to obtain access to the increased spectrum & mobile towers infrastructure required for 5g rollouts, and the other carriers entered into a spectrum by licensing arrangements from the MNOs that hold valuable spectrum licenses.

In the United State of America, in the telecommunications industry, a large horizontal merger i.e merger between the competing companies has been doing rounds since a longtime. The Big Four- T-Mobile, Sprint, AT&T, and Verizon and their prepaid equivalents have ruled the industry, making it nearly impossible for new companies to compete.The Big four- T-Mobile, Sprint, AT&T, and Verizon and their prepaid equivalents have ruled the industry, making it nearly impossible for new companies to compete. Well, now the Big Four has become the Big three.

What Drove The Telecom For M&A?

In the telecom industry, mergers are carried out as they have the potential to benefit consumers through increased investment as they relieve capital constraints and/or lower the per cost of expanding the network (due to network or spectrum synergies).  In the T-mobile & Sprint merger, the following were the reasons specifically:-  Firstly, access to the Radio-Frequency (RF) spectrum is limited to national resources which are getting increasingly precious with time. The available radio-frequency (RF) spectrum below 10 GHz has become very limited because of the exponential increase in wireless data traffic. The radio spectrum used by them contains a limited number of frequencies due to factors such as propagation characteristics of different bands, equipment available for different types of allocations, and the suitability of different frequency bands for specific allocations. The increasing spectrum holdings increase the capacity of the existing network, reduce the incremental cost of expanding capacity and further increase the total amount of usable spectrum. The implications for these were stated by Victor Marrero, United States District Judge, in the Sprint/T-Mobile New York v. Deutsche Telekom AG, 439 F. Supp. 3d 179 (S.D.N.Y. 2020) case, “‘’The undisputed evidence at trial reflects that combining Sprint and T-Mobile’s low-band and mid-band spectrum on one network will not merely result in the sum of Sprint and T-Mobile’s standalone capacities, but will instead multiply the combined network’s capacity because a technological innovation referred to as “carrier aggregation” and certain physical properties governing the interaction of radios.”’’The T-Mobile had a substantial low-band spectrum that Sprint lacked, while Sprint had a substantial mid-band spectrum that complemented T-Mobile’s holdings which allowed a more efficient spectrum (using the low band in areas where mid-band could not reach) leading to better coverage and cost efficiencies. Having a broad range of spectrum allowed new T-Mobile to dedicate each band of spectrum to its best use.

Secondly, the rollout cost i.e introduction and integration cost in the market , while the existing installation sites can be utilized, they also require significant new installations. The need for more fiber connections has encouraged mergers between wireless and fiber companies as they own much of the network infrastructure, which plays a key role, adding to this the required resources, expertise of wireless & cable providers and size further seems inevitable for consolidation to provide for the rollout of 5G. 

Mega Merger of T-mobile & Sprint in US

Thirdly, the MNOs largely seek to gain market share, scalability & lasting profitability in the new technology and potentially drive for more consolidations. Similarly again, in Sprint/T-Mobile, the United States District Court was concerned with the viability of Sprint as a competitor given its financing issues, stating: “The weight of the evidence at trial establishes that Sprint is caught in a vicious cycle caused by its inability to finance meaningful network investment, which perpetuates a low-quality network that drives away customers and limits Sprint’s ability to generate the cash necessary to reduce its financial constraints, relieving financial constraints.” Sprint was faced with financial difficulties that wouldn’t be resolved absent the merger, which impacted its ability to invest. 

While, the merger catalyzed, raising the question of whether the expected efficiencies gained from combining the largest firms would outweigh the anti-competition effects. 

 T-Mobile and Sprint merged in a $30 billion merger deal, approved by the FCC and DOJ to bring a transformational nationwide 5G network. After the merger, 15% of Sprint’s post-paid traffic moved to T-Mobile. With the plan of using the 2.45 GHz spectrum (Sprint’s treasure trove), the integration of the Sprint mid-band spectrum is a key part of T-Mobile’s 5G strategy. Consequently, aiming to combine low-band 600MHz spectrum for broad, nationwide 5G coverage with faster but lower-range mid-band (Sprint’s 2.5GHz network) and short-range, mmWave networks for a balance of coverage and speed. The 2.5 GHz serves as the middle layer, with a millimetre wave (mmWave) in areas where a high-band spectrum will be strategically deployed.Subsequnt, the merger closed, it worked at a frenzied pace to deploy the 2.5 GHz spectrum for 5G. This however, led to claims by a group of states, that said “the proposed transaction would violate antitrust laws and raise prices”, addition to it even the DOJ stated “the merger shrunk a highly concentrated market from four-three competitors” & ‘’significantly harmed’’ consumers, as per the US antitrust guidelines. 

To analyse such an impact, determining the change in market concentration was proposed and the commonly accepted measure Herfindahl-Hirschman Index (HHI)— was used. The sum of squared market shares (the higher the post-merger HHI and the increase in the HHI, the greater the potential competitive concerns). When two companies are merging like T-Mobile and Sprint, especially in already highly concentrated markets, the guidelines say that a merger that raises the total HHI by 100 to 200 points raises “significant competitive concerns,” and mergers that raise the index by more than 200 points “will be presumed to be likely to enhance market power.” 

Firstly, The T-Mobile and Sprint merger blasts past the red zone and raises the market concentration numbers by 466 points nationally, violating the DOJ and FTC’s Horizontal Merger Guidelines, and the Clayton Act as such a merger has the potential to substantially lessen the competition. 

Secondly, consolidated competition serves to increase the possibility of tacit collusion (higher prices for the consumers in the market) as merger has led to significant barriers to entry for new competitors. As the consumers require nationwide network coverage & the new entrant would require a nationwide network & spectrum to compete, which substantially would take time. Additionally, Therefore, the merger does not outweigh the anticompetitive effects and substantially violated Section 7 of the Clayton act.  

Forthwith, the T-mobile strategically in the process of building a 5G network using Sprint’s spectrum & tower assets retired older network technologies to free up spectrum & resources that will aid the entire network and enhance advanced technologies.  


Although the competition spurred among the carriers, eventually served the best service to direct users, but the spectrum and network coverage occupied by the merging entities restricted new entrants. But, the verdict in New York v. Deutsche Telekom AG, 439 F. Supp. 3d 179 (S.D.N.Y. 2020) flavoured the mergers on the ground- divestiture of certain spectrums, aiding Dish Network Corp as a fourth entrant in the nationwide MNOs by giving robust access for seven years & Sprint’s prepaid business, no hiking the price for three years post-merger and to eliminate anti-competitive concerns.


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July 2024