A question we frequently receive is, “How will I be impacted by the Sprint T-Mobile merger?”. Before we answer that question, let’s find out how did we get here.
How & Why Did The Merger Start?
In 2018 Softbank, Sprint’s majority owner, reached an agreement to buy T-Mobile. Any merger would require the review and approval of the Department of Justice (DOJ) and the Federal Communications Commission (FCC). The DOJ would look at antitrust concerns while the FCC would be concerned with what is best for the US consumer. It was speculated at the time that the Sprint brand would disappear and T-Mobile’s brand and flamboyant CEO John Legere would be in charge post merger. We now know that John Legere is retiring, maybe riding off into the sunset to write more cooking books.
Sprint T-Mobile Faced Legal Challenges To Get Here
It was announced in February 2020 by Federal Judge Victor Marrero the United States District Court in Manhattan that Judge Marrero has ruled in favor of T-Mobile’s then valued $26 billion takeover of Sprint.
The challenge against the merger was filed in a suit by attorney generals from 13 states and the District of Columbia. This ruling will combine the third and fourth largest wireless carriers creating a new wireless carrier with more than 100 million users.
After the merger is complete the plan was that the majority of Sprint customers will have T-Mobile plans. Customers of Sprint’s pre-paid brands (Boost Mobile, Virgin Mobile, and Sprint prepaid), will become Dish Network customers.
Sprint T-Mobile Merger Closes $30 Billion Deal
T-Mobile and Sprint announced the closing of their merger on April 1, 2020. The colorful T-Mobile CEO John Legere stepped down as CEO and the more buttoned-up Mike Sievert took the helm of the combined company. The company uses the name T-Mobile moving forward and now has approximately 100 million customers. This allowed T-Mobile to surpass AT&T as the number two largest wireless provider.
T-Mobile agreed to enter into a limited seven year term deal with Dish to lease Dish access to its network. This is supposed to give Dish time to build its own network, however, many skeptics believe Dish will coast on their limited-term deal and then sell of their spectrum holdings in the future for a profit. Skeptics further believe Dish never has any intentions of truly building a new wireless network.
What Does That Mean For Sprint & T-Mobile Landlords?
We have seen a slow-down in T-Mobile leasing activity while they figure out their new network, but not a complete stop. Some projects have grind to a halt, however at Airwave Advisors we have managed to get some lease renewals completed with the new combined entity.
In 2018 it was forecasted that the merger between T-Mobile and Sprint, who operate a total of 110,000 towers, would cause the companies to shut down 35,000 towers and build 10,000 new towers. This would be due to overlapping coverage of towers due to the merger and the filling of holes in the network.
It is anticipated that Crown Castle who receives 20% of their tower revenues from T-Mobile and 13% of their tower revenues from Sprint will be hurt the most with the merger.
Crown Castle’s top competitor American Tower Corporation on the other hand has less exposure to the merger with T-Mobile representing 9% of their US based revenue and Sprint representing 8%.
As far as private landlords, we anticipate there will be many site decommissions and rents will stop coming in within the next 36 months.
If you have both Sprint and T-Mobile on your property there is a chance that one these tenants will disappear. If they say a picture is worth a thousands words then the one below of network overlap in T-Mobile & Sprint’s network from Mosaik reads like a book.
What Is The Process To Determine A Decomission?
Right now we are seeing T-Mobile evaluate all the Sprint sites and the ones they do not want to keep they are offering up to DISH. DISH can then decide if they want to take on that cell site, or if they want to pass. Only after a site has been passed over by both T-Mobile & DISH will the site be determined not of value to either network and decommissioned.
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About Nick G. Foster
Since founding Airwave Advisors® in 2014, Mr. Foster has added value to over 400 clients ranging from the State of Nevada, City of Beverly Hills, to Habitat For Humanity. Mr. Foster focuses on cell tower lease renewals, buyouts, new lease negotiation, and cell site lease management. Prior to starting Airwave Advisors® Mr. Foster founded and led the Cell Site Services Group within nationwide commercial real estate services leader Cassidy Turley (now known as Cushman & Wakefield).