Sprint And T-Mobile Shares Jump After FCC Signals It Will Approve $26B Merger

The $26 billion merger of Sprint and T-Mobile will get the blessing of the Federal Communications Commission in exchange for pledges by the company to build out a 5G network that will cover 99% of the U.S. by 2026.

Shares in Sprint jumped 25% in Monday morning trading to about $7.70, their highest level in nearly two years. T-Mobile stock gained nearly 6% to around $79.70.

The FCC said it will consider the T-Mobile-Sprint deal on June 15, with Chairman Ajit Pai planning to present a draft order recommending approval “in the coming weeks.”

The deal will create a stronger No. 3 competitor for the two dominant telecom players, AT&T and Verizon. In order to receive approval from the FCC, the companies have promised to build out a 5G network that will be available for 97% of the U.S. population within three years of the deal’s closing, and for 99% within six years. An estimated 90% of rural communities will gain access to 100 Mbps broadband within six years, and 99% at 50 Mbps, according to projections by FCC officials.

Related Story

YouTube TV And Verizon Form Cross-Platform Distribution Partnership

Penalties for failing to meet the buildout targets would run into the billions of dollars, the FCC said.

Another concession by the companies is the divestment of the Boost Mobile prepaid wireless unit.

In a statement, FCC Chairman Ajit Pai said the agreement with the companies helps the regulatory agency continue to meet two of its stated goals. One is “closing the digital divide” in rural America, and the other is advancing the competitive position of the U.S. in the rollout of 5G wireless technology.

“The construction of this network and the delivery of such high-speed wireless services to the vast majority of Americans would substantially benefit consumers and our country as a whole,” Pai said.