FCC: Sprint, T-Mobile Would Pay Over $2B If Merger Conditions Not Met

Although the deal passed FCC muster already, the merger still faces a court challenge from 15 states as well as the District of Columbia.

Wireless giants T-Mobile and Sprint would be on the hook for over $2 billion in payments if the companies don’t abide by terms set by the Federal Communications Commission as part of the firms’ merger approval.

The $26.5 billion merger received approval from the FCC last month, but the agency disclosed the details of the Republican-led 3-2 vote on Tuesday.

As part of the FCC’s approval, Bellevue-Washington-based T-Mobile and Overland Park, Kansas-based Sprint promised that within three years they would deploy 5G service to “cover 97% of the American people, and within six years to reach 99% of all Americans.” The companies also pledged that “within six years, 90% of Americans would have access to mobile service with speeds of at least 100 Mbps and 99% of Americans would have access to speeds of at least 50 Mbps.”

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The FCC said that in order to ensure that the commitments are met, “the parties will be required to make payments that could reach over two billion dollars if they do not meet their commitments within six years. Moreover, the parties will be required to make additional payments until they have fulfilled their commitments.”

Although the deal passed FCC muster already, the merger still faces a court challenge from 15 states as well as the District of Columbia.

In July, the two companies received approval from the U.S. Department of Justice with some caveats. The combined company would have to divest Sprint’s prepaid businesses and Sprint’s 800 MHz spectrum assets to Dish Network. After the deal closes, the companies will provide Dish wireless customers access to the new company’s network for seven years and offer standard transition services arrangements to Dish during a transition period of up to three years. Dish will also have an option to take on leases for certain cell sites and retail locations that are decommissioned by the combined company.

CRN has reached out to T-Mobile for comment.