T-Mobile Pauses 5G Network Construction Due to Sprint Merger Delays – Report

Mike Dano
8/28/2019

T-Mobile is halting some of its 5G network buildout efforts, according to a new report, due to delays preventing the close of the Sprint merger.

Citing interviews with seven unnamed T-Mobile network construction contractors, Wireless Estimator reported that the operator is suspending new purchase orders for network equipment for the remainder of 2019. The publication quoted a T-Mobile manager who requested anonymity who said that the construction freeze is due to the ongoing delays around T-Mobile's attempts to merge with Sprint. T-Mobile had hoped to close the merger by July, but a lawsuit against the transaction by a group of state attorneys general has thrown the deal into disarray. The T-Mobile manager said the company had allocated at least $1 billion for network upgrades in 2019 following the close of the merger.

A T-Mobile spokesperson told Wireless Estimator that "we are managing capital expenditures as we do every year, and we continue to invest billions to build out our network aggressively, expanding LTE coverage and performance while simultaneously laying the foundation for broad, nationwide 5G in 2020. That hasn't and won't change."

In its most recent quarterly report, T-Mobile said it spent $1.79 billion during the second quarter on property and equipment, a slowdown from the $1.93 billion it spent in the first quarter. The company's CFO said T-Mobile remains on track to spend between $5.4 billion and $5.7 billion (excluding $400 million in capitalized interest) on capital expenditures in 2019. "This is unchanged from our prior guidance range, but we do now expect to be at the very high end of the guidance range," T-Mobile CFO Braxton Carter said during the company's Q2 earnings conference call with investors, according to a Seeking Alpha transcript of his remarks.

Wireless Estimator closely tracks the nation's wireless network construction business, including the tower and small cell companies that engage in the physical work of maintaining and upgrading operators' cellular networking equipment.

T-Mobile's long and troubled courtship of Sprint -- which promises to merge the companies' spectrum holdings into a single super-fast 5G network -- has managed to receive approvals from every major federal agency, including the Department of Justice and the FCC. However, a group of mostly Democratic state attorneys general has filed a lawsuit against the transaction, arguing that it is anticompetitive and will drive up prices for consumers throughout the country.

In response, T-Mobile has pledged not to raise prices for wireless service for three years after the deal closes, and has inked a deal with Dish Network that positions the satellite TV provider to enter the US wireless industry first as an MVNO and, later, as a full-fledged wireless network operator.

T-Mobile is reportedly negotiating a settlement with the state AGs, and the company has said it expects its merger with Sprint to close by the end of 2019.

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

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