Sprint – T-Mobile Merger Takeaways

February 2020 - Jeff Johnston


The verdict is in and a federal judge has cleared the way for Sprint and T-Mobile to merge. There are three main takeaways for rural America.

First, if the new T-Mobile stays true to its merger commitment – which is to offer 5G coverage to 85% of rural Americans within three years of the merger and 90% within six years – it will have a positive impact on bridging the digital divide. However, it’s important to note that not all 5G wireless networks are the same, and it’s quite possible that T-Mobile’s rural 5G network speeds will be similar to what’s being offered today on 4G networks.

Second, some rural wireless operators could see their roaming revenues decline, which would be problematic for operators who are heavily reliant on this revenue stream. Sprint has been a major roaming customer for rural wireless operators whereas T-Mobile has not. Now this probably has to do with T-Mobile’s superior rural coverage footprint, according to Opensignal, a mobile analytics company.

With broader coverage in rural America from company owned infrastructure, T-Mobile would be less reliant on rural roaming agreements as compared to Sprint. These agreements will likely go away when the two networks are consolidated.

Third and last, we do think this merger has some bright spots for rural operators. For example, in order for the new T-Mobile to meet its rural coverage requirements, it makes sense for them to partner with rural operators for tower leases and backhaul.

We also see opportunities with Dish, who has emerged as a new nationwide wireless operator. Initially, Dish will use a network access wholesale agreement it negotiated with the new T-Mobile. Basically, Dish wireless customers will be on T-Mobile’s network. However, we think Dish will aggressively move away from this strategy and build its own network to help drive margin expansion. Rural operators should be well positioned to support this effort with their wireless and fiber infrastructure.

Overall, we’re optimistic this merger will help bridge the digital divide, but by no means do we think it’s a silver bullet solution. Rural America still needs billions and billions more in federal support before the digital divide can ultimately be addressed.