(TNS) — A federal judge in New York ruled in favor of T-Mobile and Sprint, clearing the way for the two cellular companies to merge and reduce the number of major wireless carriers in the U.S. from four to three.
The decision issued Tuesday morning rejected arguments lodged in a lawsuit by California and other states about the merger’s potential to reduce competition and possibly create price increases for customers. It came after the U.S. Department of Justice and the Federal Communications Commission both gave their approval to the $26.5 billion merger.
T-Mobile and Sprint first announced their intention to merge in May 2018.
For Fresno County, U.S. District Court Judge Victor Marrero’s decision is one of the last major obstacles to a merged T-Mobile’s plans to create a major customer service call center in Kingsburg that is expected to employ more than 1,000 people. The call center is among several that were pitched in communities across the country in anticipation of the merger.
But T-Mobile representatives noted last year that the Kingsburg center and others would not materialize if the merger was denied.
“This is a big win and a big day for the New T-Mobile,” said Mike Sievert, T-Mobile president and chief operating officer, who will take over as the company’s CEO in May. Sievert said the companies hope to tie up remaining loose ends and close the deal as early as April 1.
“Judge Marrero’s decision validates our view that this merger is in the best interests of the U.S. economy and American consumers,” Sprint Executive Chairman Marcelo Claure said.
The two companies were able to convince federal antitrust regulators that the merger would allow a larger T-Mobile to better expand new 5G wireless technology across the nation, reduce costs, and increase availability of high-speed mobile and in-home broadband service.
Among the conditions that federal regulators put on the merger was that Sprint sell its prepaid wireless phone businesses, including Boost Mobile and Virgin Mobile, to satellite TV provider DISH. T-Mobile and Sprint must also make available to DISH at least 20,000 cellular sites and hundreds of retail stores to enable DISH to become a fourth major competitor in the wireless industry.
Without the divestiture of the Sprint assets, the U.S. Department of Justice said that “the proposed acquisition would eliminate competition between two of only four facilities-based suppliers of nationwide mobile wireless service.”
DISH co-founder and chairman Charlie Ergen said the company plans to develop its own 5G network as it enters the wireless business as another major competitor to AT&T, Verizon and the new T-Mobile.
“We appreciate Judge Marrero’s thorough evaluation of this merger,” Ergen said Tuesday. “The ruling, in addition to the DOJ and FCC approvals, accelerates our ability to deploy the nation’s first virtualized, standalone 5G network and bring 5G to America.”
Plans For Kingsburg
An economic analysis commissioned by T-Mobile last year forecast that the Kingsburg call center would have 1,007 employees. “T-Mobile estimates that employees at the center will have an average weekly compensation between $1,129 and $1,254” in both salary and benefits,” the analysis by Berkeley Research Group stated. Total payroll at the center – which would be expected to be fully staffed and operational in 2022 – is expected to be between $56 million and $65 million a year.
When T-Mobile announced its choice of Kingsburg – a city of about 12,000 people along Highway 99 in southern Fresno County – as the site for one of its new call centers, the company did not disclose whether it plans to own or lease a site in the community. The Berkeley Research analysis, however, indicated that lease costs for a call center site would be about $1.5 million per year.
Kingsburg’s location at the intersection of three sets of county lines – Fresno, Kings and Tulare counties – means that the new center will likely draw its workforce from throughout the region. According to estimates from the state Employment Development Department, Kingsburg’s workforce included about 5,700 people last year, with unemployment in the city estimated at about 400 people.
Unemployment rates in the region are several percentage points higher than the statewide average. In December, rates were estimated at 6.9% in Fresno County, 7.7% in Kings County and 9.3% in Tulare County, compared to a statewide unemployment rate of 3.7% in December.
California Attorney General Javier Becerra joined attorneys general of about a dozen other states suing to block the merger. “Our concerns with this merger have been, are and continue to be about the harms posed by over-consolidation and diminished market competition,” Becerra said when the suit was filed last summer. “A marketplace with fewer active competitors drives up costs, reduces consumer choice, and thwarts innovation.”
On Tuesday, the judge in New York said the companies’ contention that the merger would cut prices and the states’ arguments that prices would go up “essentially cancel each other out.”
Among the final pieces before the merger can be finalized are approval by a different court of the DISH settlement; the California Public Utilities Commission also must approve the merger.
The Associated Press contributed to this report.
©2020 The Fresno Bee (Fresno, Calif.). Distributed by Tribune Content Agency, LLC.