Sprint T-Mobile Merger Approval Impacts Cell Tower Lease Landlords

By Nick G. Foster

February 11, 2020

Sprint T-Mobile Merger Moves Forward

It was just announced by Federal Judge Victor Marrero the United States District Court in Manhattan that Judge Marrero has ruled in favor of T-Mobile’s $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.

The merger may be finalized as early as April.

After the merger is complete 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.

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 believe Dish never has any intentions of truly building a new wireless network.

Is The Merger A Done Deal?

Not exactly, but it is pretty close to being a done deal. The merger still requires the endorsement of the California Public Utilities Comission and it is possible that the states who challenged the merger could appeal the ruling, however legal analysts say it is not likely.

What Does That Mean For Sprint & T-Mobile Landlords?

We have seen a slow-down in T-Mobile leasing activity while they await the merger decision. Last quarter it was communicated to Airwave Advisors by a number of T-Mobile representatives that they were to hold off on leasing activity such as new cell site development and amendments.

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 the 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 within the next 24 months. If you have both Sprint and T-Mobile on your property there is a very high chance of these tenants will most certainly disappear. We don’t know for sure which one it will be as of yet. For now it is a wait and see approach. Will Dish start up their engine and build out a wireless network, or as skeptics say, sit on the deal and sell when the time is right?

Sprint T-Mobile Merger Cell Tower Overlap

If they say a picture is worth a thousands words then the above network overlap image from Mosaik reads like a book.

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.

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Nick Foster Airwave Advisors

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).