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U.S. DoJ Approves T-Mobile - Sprint Merger

T-Mobile US Inc. (TMUS) and Sprint Corp. (S) received approval from the U.S. Department of Justice for their proposed merger.

As per terms of the proposed settlement with the Justice Department, the companies have agreed to divest Sprint's prepaid business, including Boost Mobile, Virgin Mobile, and Sprint prepaid, to a Colorado-based satellite television provider Dish Network Corp. (DISH).

The proposed settlement also provides for the divestiture of certain spectrum assets to Dish. Additionally, T-Mobile and Sprint must make available to Dish at least 20,000 cell sites and hundreds of retail locations. T-Mobile must also provide Dish with robust access to the T-Mobile network for a period of seven years while Dish builds out its own 5G network.

The completion of the T-Mobile and Sprint merger remains subject to remaining regulatory approvals and certain other customary closing conditions. They expect to receive final federal regulatory approval in the third-quarter and currently anticipates that the merger will be permitted to close in the second half of 2019.

Separately, DISH said it has committed to the Federal Communications Commission that DISH will deploy a facilities-based 5G broadband network capable of serving 70 percent of the U.S. population by June 2023, and has requested that its spectrum licenses be modified to reflect those commitments.

DISH confirmed that its proposed asset acquisitions from Sprint are valued at about $5 billion, including a $1.4 billion purchase of Sprint's prepaid businesses, and a $3.6 billion agreement to purchase Sprint's nationwide 800 MHz wireless spectrum. The spectrum purchase is expected to be completed three years after the closing of the acquisition of the prepaid businesses.

In April 2018, T-Mobile US, a unit of German telecom giant Deutsche Telekom (DTEGY.PK), agreed to merge with Sprint, a unit of Softbank Group Corp., in an all stock deal. The combined company will be named T-Mobile.

The merger would be at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint shares for each T-Mobile US share. It represented a total implied enterprise value of about $59 billion for Sprint.

TMUS closed Friday's trading at $84.25, up $4.34 or 5.43 percent.

Sprint closed up 7.39 percent on Friday at $7.99.

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