T-Mobile this week inked another agreement with a state attorney general to secure support for the company's proposed merger with Sprint. The actions indicate T-Mobile is willing to make multiple, separate, state-level promises to get its long-gestating merger approved.

Perhaps more importantly, T-Mobile's latest actions appear to reinforce the notion that Sprint's 2.5GHz spectrum holding -- the main reason T-Mobile wants to merge with Sprint -- is essential to T-Mobile's wider 5G strategy for the future, and that T-Mobile will go to great lengths to get it.

Yesterday, Mississippi's attorney general reversed his position against the merger and said the state will now support the deal. That agreement comes just days after T-Mobile inked a separate agreement with Florida's attorney general to secure that state's support for the merger. T-Mobile's deal with Florida included commitments around jobs and disaster recovery in the state, and T-Mobile's deal with Mississippi includes a detailed, eight-page agreement between the state and T-Mobile and specific promises from T-Mobile covering a range of topics:

While Mississippi switched from opposing to now supporting the merger of Sprint and T-Mobile, there are still 17 states that remain opposed to the merger. As the analysts at Wall Street research firm Raymond James noted, 16 of those opposing states are led by Democratic attorneys general and only one (the attorney general in Texas) is Republican. Those states officially supporting the merger include seven with Republican attorneys general and now one Democratic (Mississippi).

"We continue to believe this is a very political process and expect additional Democrats to join the AG lawsuit, but also see additional settlement talks and potential concessions ending with less states on the lawsuit by the time the lawsuit starts December 9," wrote the Raymond James analysts in a note to investors. New York's attorney general is leading the lawsuit against the proposed merger of Sprint and T-Mobile, and the trial is scheduled to start in December.

Other Wall Street analysts argued that T-Mobile's agreement with Mississippi's officials doesn't necessarily indicate any major momentum forward for the merger. "While we view this settlement as a positive our discussions with our DC legal contacts would suggest to contain our enthusiasm," wrote the analysts at Wells Fargo in a note to investors. "According to these conversations, they acknowledged while we may even see more states may drop out over the coming weeks, unless a settlement is reached with NY where this originated, there will be a case commencing in December."

Should T-Mobile renegotiate its Sprint deal?
Indeed, based on the continued and ongoing opposition to the merger among a group of state attorneys general led by New York, one Wall Street firm is urging T-Mobile's management to renegotiate its merger with Sprint in order to get a better deal. "Sprint's business has been eroding faster than expected and the DoJ conditions for approval were costly. In addition, the extended time it has taken to obtain the necessary approvals to close the deal has lead to a longer than expected erosion of Sprint's business and there is risk that any negotiation with the States could add additional and unexpected costs to the transaction," wrote Walter Piecyk and Joe Galone of LightShed Partners in a post.

The analysts calculated that Sprint's 2021 earnings before interest, taxes, depreciation and amortization have declined by $1.6 billion, and its net debt has risen by $1.1 billion, since the merger deal was announced in April 2018. The firm also calculated that the entry of Dish Network into the mobile market -- a condition of the Department of Justice's approval of the Sprint/T-Mobile merger -- could reduce T-Mobile’s revenue by $2 billion by 2021.

"We also believe DT gave up too much in the initial deal negotiation, handing most of the deal synergies to Sprint shareholders. SoftBank [Sprint's majority owner] might not want the bad press of a renegotiation this soon after the implosion of WeWork, a large SoftBank Vision Fund investment. However we believe it is merited and that the alternative for Sprint and SoftBank is far worse," the LightShed analysts wrote.

T-Mobile appears set to continue to work to close the deal, having already secured approvals from the Department of Justice (thanks to the positioning of Dish Network as a fourth US wireless network operator) and the FCC (after some reported foot-dragging by Republican FCC Commissioner Brendan Carr). A number of analysts expect the operator to come to some kind of definitive conclusion on the transaction in the early days of December, ahead of the start of the trail with the opposing state attorneys general.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano