Sprint & T-Mobile Aim to Keep as Much Spectrum as Possible in Merger – Report

Sprint and T-Mobile will reportedly try and hang onto as much spectrum as possible in any forthcoming merger -- targeting a deal without any immediate asset sales -- in anticipation of maintaining as much bandwidth as possible for 5G services in 2019 and beyond.

Reuters cites sources familiar with the matter who say that the pair will announce a deal that tries to keep their large spectrum holdings and anticipated cost synergies intact, with the expectation that US regulators will ask for concessions if the deal is allowed to go forward.

T-Mobile US Inc. and Sprint Corp. (NYSE: S) are now widely expected to announce a deal at the end of October or in early November. (See T-Mobile, Sprint in Merger Talks, Again – Report.)

Concessions are usually an upfront part of any major merger agreement that involves US regulators. For instance, in AT&T's $39 billion bid to take over T-Mobile, which collapsed at the end of 2011 because of regulatory concerns, Ma Bell was expecting to sell off around a quarter of T-Mobile's subscriber base and spectrum holdings.

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A combined Sprint and T-Mobile would have spectrum holdings of over 300MHz, including 160MHz of high-band 2.5GHz for Sprint and the 600MHz spectrum T-Mobile bought at auction this year. This would give the combined entity around 130 million subscribers and more spectrum than any other operator in the US.

Sprint is planning to start deploying 5G on its 2.5GHz (band 41) spectrum, while T-Mobile plans to deploy nationwide on 600MHz to begin with. Bear in mind that 5G networks are expected to require 100MHz radio channels to deliver gigabit-plus download speeds and you can see why access to spectrum will be crucial for any combination of Sprint and T-Mobile. (See Sprint Plans 2.5GHz-Based 5G Launch in 2019 and T-Mobile Says Its 600MHz LTE Sites Will Be 5G-Ready.)

It is not clear yet how the Federal Communications Commission (FCC) or the Antitrust Division of the U.S. Department of Justice would approach such a massive telecom merger yet. In recent months, however, carrier CEOs have sounded optimistic notes about seeing a relaxed regulatory approach from the Trump administration.

A multi-billion merger creating a 5G spectrum powerhouse is likely to show how realistic -- or unrealistic -- such assumptions were. Particularly as the merger would be between T-Mobile, which is owned by German carrier, Deutsche Telekom AG (NYSE: DT), and Sprint, which is held by Japanese operator, SoftBank Corp.

— Dan Jones, Mobile Editor, Light Reading

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