The Justice Department on Friday approved the merger of T-Mobile and Sprint, the third- and fourth-largest wireless companies in the United States, saying its antitrust concerns had been addressed and giving its blessing to a deal that would reshape the nation’s wireless industry.

Critics of the merger have said it would reduce competition by lowering the number of wireless carriers from four to three, resulting in higher cellphone bills. On Friday, those critics, a group that includes attorneys general from several states and Democratic presidential candidates, continued to voice their objections to the deal, saying the combination would harm consumers.

Until recently, the Justice Department shared those concerns. In a news briefing on Friday, Makan Delrahim, the Trump administration’s top antitrust regulator, said the agency had only decided to approve the deal after T-Mobile and Sprint agreed last week to sell off significant portions of their businesses to the pay-television operator Dish Network as part of a plan to create a potential new major wireless company. Under the agreement’s terms, Delrahim said, “Dish is in a unique position to succeed.”

The merger deal’s terms call for T-Mobile, the larger of the two companies, to effectively buy Sprint in an all-stock transaction valued at $26.5 billion. The combined company, to be called T-Mobile and led by T-Mobile’s chief executive, John Legere, would be a formidable rival to AT&T, the largest wireless carrier in the country, and Verizon, the second-largest.

Before getting the Justice Department’s approval, T-Mobile and Sprint took steps to win over the Federal Communications Commission, which oversees the telecommunications industry. In May, Ajit Pai, the commission’s chairman, signaled his support after the companies committed to investing heavily in rural broadband service and the fifth-generation cellular networks known as 5G, which brings faster-than-broadband speeds through the air.

In addition to extending reliable internet access to rural areas, 5G is expected to fuel the development of autonomous cars and other so-called moonshot projects. President Donald Trump has argued that the technology is critical to national security, citing its importance in his administration’s crackdown on the Chinese telecommunications giant Huawei. T-Mobile and Sprint have said they would have a more difficult time making progress with 5G as separate businesses than they would as one entity.

Although the Justice Department’s approval was a crucial step forward for the merger, it is not a done deal. In a rare move last month, the attorneys general of 13 states and the District of Columbia threw a significant obstacle in its path when they sued to block the transaction.

On a conference call Friday, Letitia James, the New York attorney general, said the plan to transform Dish into a fourth major wireless carrier was not realistic.

“Dish has never owned any kind of mobile wireless business,” she said. “Dish has no experience building or operating a nationwide mobile wireless network.” James added that the agreement brokered by the Justice Department would hurt consumers and “violates antitrust laws.”

T-Mobile and Sprint have reached a $5 billion agreement to give Dish Sprint’s prepaid wireless businesses, including Boost Mobile, which is popular with lower-income customers, and some of its airwaves, known as spectrum.

Critics have contended that Dish would not be a legitimate competitor to the merged companies because it would only have about 9 million customers and its wireless service would have to operate on T-Mobile’s network, generating more revenue for T-Mobile.

Dish plans to create a fully owned network, but building the infrastructure for it would be expensive, and Dish has been losing subscribers steadily to cheaper streaming services.

The Justice Department’s approval of the merger relies on the future actions of Dish, a company with a history of violations that is controlled by billionaire Charles Ergen, an expert poker player and tough negotiator. Dish would face millions of dollars in fines if it failed to build out its cellular service, Delrahim said.

In a statement on Friday, Dish said it would voluntarily pay a fine of up to $2.2 billion if it failed to deploy a 5G network covering at least 70 percent of the country’s population in the next four years. </s> WASHINGTON, July 26 (Reuters) - The U.S. Justice Department said on Friday it is approving T-Mobile US Inc's$26 billion takeover of rival Sprint Corp , clearing a major hurdle to a deal that would merge the nation's third and fourth largest wireless carriers.

The companies have agreed to divest Sprint's prepaid businesses including Boost Mobile to Dish Network Corp in order to move ahead with the merger, which was announced in April 2018.

T-Mobile Chief Executive Officer John Legere, who will be the CEO of the combined company, said it would deliver a 5G network with lower prices, better quality and thousands of jobs, while unlocking $43 billion in synergies.

"We are pleased that our previously announced target synergies, profitability and long-term cash generation have not changed," Legere said.

On Friday, the Justice Department and five state attorneys general said they were filing suit to enforce the settlement conditions that also include selling Virgin Mobile and Sprint prepaid and providing Dish with access to 20,000 cell sites and hundreds of retail locations.

Dish has agreed to acquire spectrum in a deal valued at $3.6 billion from the merged firm and pay $1.4 billion for Sprint's prepaid business that serves about 9.3 million customers. Dish will get access to the combined firm's network for seven years while it builds out its own 5G network.

Shares of T-Mobile, which is about 63 percent owned by Deutsche Telekom AG , were up 3.7% at $82.90. Shares of Sprint, which is about 84 percent owned by Softbank Group Corp , were up 6.5% at $7.92.

Prepaid wireless phones are generally sought by lower-income people who cannot pass a credit check.

T-Mobile, the third largest U.S. wireless carrier with about 80 million customers, pursued the deal in order to seek scale to compete with bigger rivals Verizon Communications Inc and AT&T Inc . Sprint has about 55 million customers.

T-Mobile US on Thursday beat analysts' estimates for second-quarter net new phone subscribers who pay a monthly bill, boosted by the U.S. mobile carrier's wireless plans aimed at fending off its bigger rivals. The mobile carrier said it added a net 710,000 phone subscribers in the three months ended June 30.

Federal Communications Commission Chairman Ajit Pai has given his blessing to the merger in principle and said in a statement on Friday he would soon circulate a formal order.

The FCC is expected to give Dish more time to use spectrum it previously acquired but also impose strict penalties if it fails to create a consumer wireless network within a set timeframe. </s> The U.S. Department of Justice approved the $26 billion between Sprint Corp. and T-Mobile U.S., the department said Friday.

The approval clears a major hurdle for the proposed deal between the two telecom giants.

“With this merger and accompanying divestiture, we are expanding output significantly by ensuring that large amounts of currently unused or underused spectrum are made available to American consumers in the form of high-quality 5G networks,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.

As part of its Justice Department agreement, both carriers will be required to sell assets including prepaid brand Boost Mobile to satellite TV provider Dish Network Corp.

Dish will also get the first crack to purchase telephone towers that T-Mobile declares redundant, the Justice Department said.

Those conditions would make Dish a new, fourth wireless competitor taking Sprint’s place in the marketplace.

“Today’s settlement will provide Dish with the assets and transitional services required to become a facilities-based mobile network operator that can provide a full range of mobile wireless services nationwide,” Mr. Delrahim said.

The Justice Department also announced that the attorneys general for five states opposing the deal reached a settlement. In June, the officials filed a lawsuit in a New York federal court to block the merger. They argued the deal will cost consumers more than $4.5 billion annually. </s> T-Mobile’s planned takeover of Sprint took a sizable step forward on Friday after a deal negotiated with the U.S. Justice Department behind closed doors was announced.



Under the proposed scheme, the nation’s third and fourth-largest wireless carriers would be forced to sell off wireless spectrum and prepaid businesses (such as Boost Mobile) to Dish Network, the Colorado-based satellite TV provider, effectively making it the country’s fourth-largest wireless carrier, even though it would rely entirely on T-Mobile’s own network.

T-Mobile and Sprint “must make available to Dish at least 20,000 cell sites and hundreds of retail locations,” the Justice Department said in a statement. The company that results from the deal, which would be known as T-Mobile, must also provide Dish with “robust access” to its network for a period of seven years, as Dish attempts to build out its own 5G network.

The $26 billion deal, which enjoys vocal support from the White House, still faces one significant hurdle: a lawsuit brought by 14 state attorneys general, all of whom are Democrats.

While T-Mobile applauded the settlement, promising it would create new jobs, lower prices, and better quality internet, consumer advocates long critical of the deal said it would accomplish precisely the opposite. Many characterized the deal as impossible to carry out given the government’s own history of lax enforcement around megamergers.

“No one who has followed merger enforcement over the past decade can seriously believe this will work,” Joshua Stager, senior counsel at New America’s Open Technology Institute said in a statement sent to Gizmodo. “The government’s track record of enforcing merger conditions is exceptionally poor.”

“The FCC, in particular, lacks credibility given that it has already announced a decision to rubber-stamp the merger without such a remedy,” he added.

Gigi Sohn, a fellow at the Georgetown Law Institute for Technology Law & Policy, accused Justice Department officials of bowing to political pressure from the White House. “The state AGs who sued to block the merger shouldn’t be fooled by this weak attempt to maintain competition in the mobile wireless market,” she said in her statement.

“A new mobile wireless entrant that starts with zero postpaid subscribers and that must rely on its much bigger rival, the new T-Mobile, just to operate is not a competitor. It’s a mobile Frankenstein,” added Sohn.

Jessica Rosenworcel, an FCC commissioner, tweeted that she remains skeptical that settlement will be good for consumers and the economy. She urged the Federal Communications Commission, which previously rubberstamped the merger without the Justice Department’s new conditions in place, to allow the public the opportunity to weigh in and comment.

“Too much here has been done behind closed doors,” she said. </s> NEW YORK (CNN) – T-Mobile and Sprint have finally agreed to a massive telecom merger after years of negotiations punctuated by two breakups.

The agreement would leave just three major wireless carriers in the United States and must clear antitrust regulators. The combined company, which will take on the name T-Mobile, would be positioned as a fierce competitor to Verizon and AT&T.

T-Mobile CEO John Legere, who will head the merged company, said on a conference call Sunday that the firm plans to deliver “the highest capacity network in US history.”

He said the company will hire thousands of people in a bid to create a nationwide network that will position the United States as the leader in providing 5G connectivity.

A recent report from research firm Analysys Mason suggests it’s China and South Korea, not the United States, that are currently leading 5G development.

The move combines the third and fourth largest wireless service providers in the nation. Sprint was valued at $26 billion based on its last closing price, and T-Mobile was last valued at $55 billion. The deal values Sprint near its latest closing share price of $6.50.

Andrew Schwartzman, an attorney who specializes in telecommunications and a professor at Georgetown Law, said he expects it will be “difficult” to get regulators to sign off on the merger.

Sprint and T-Mobile first discussed a merger in 2014 but scrapped it because of concerns about regulatory challenges from the Obama administration.

Schwartzman noted the deal was blocked because regulators determined that the wireless market could support four major players, and having them compete benefited consumers.

“It will be difficult to convince the Justice Department that circumstances have changed so much that it’s necessary to go down to three providers,” he said. “That’s the major hurdle that has to be confronted.”

The companies expected to have a better shot at the merger under the Trump administration.

Sprint stock tanks as T-Mobile merger said to collapse

SoftBank CEO Masayoshi Son met with President Donald Trump the month before he took office to talk up an investment in US businesses.

A few weeks later, T-Mobile’s Legere said he was open to “various forms of consolidation” when asked about a potential merger with Sprint and SoftBank under the Trump administration.

But last November, after much speculation, the two companies issued a statement saying they had “ceased talks.”

“While we couldn’t reach an agreement to combine our companies, we certainly recognize the benefits of scale through a potential combination. However, we have agreed that it is best to move forward on our own,” Marcelo Claure, the Sprint CEO, said at the time.

Sprint and T-Mobile’s announcement is just the latest step in an ongoing movement towards telecom consolidation. AT&T is in talks to acquire Time Warner, which owns CNN. The outcome of that $85 billion merger-in-the-making depends on a case in federal court, which is pending the decision of the judge. </s> WASHINGTON (Reuters) - T-Mobile US Inc won U.S. antitrust approval for its $26 billion takeover of rival Sprint Corp, the Justice Department said Friday, clearing a major hurdle to a deal that merges the nation’s third and fourth largest wireless carriers.

The companies have agreed to divest Sprint’s prepaid businesses, including Boost Mobile, to satellite television firm Dish Network Corp to create a fourth U.S. wireless carrier.

The Justice Department indicated the deal would improve competition and the rollout of faster 5G networks by combining weaker players and creating a strong, new No. 4, in Dish, that has unused spectrum, which can be activated. Critics, including some state attorneys general, say competition won’t increase and prices for mobile phone plans will rise.

The deal is a clear success for T-Mobile Chief Executive Officer John Legere, who will be the CEO of the combined company and who pushed back at critics arguing a more concentrated market would lead to higher prices.

“It’s a bit dumbfounding to think that we’ve decided to go and build this network and go through this merger so that we can become the basic, lazy, fat, dumb and arrogant players that we were born to teach how to behave,” he told analysts in a conference call.

Assistant Attorney General Makan Delrahim, head of the Justice Department’s antitrust division, said the deal would hasten the development of 5G, the next generation of wireless.

Shares of T-Mobile, which is about 63 percent owned by Deutsche Telekom AG, were up 5.3% at $84.17. Shares of Sprint, which is about 84 percent owned by Softbank Group Corp, rose 7.1% to $7.97. Dish was up 0.7% at $39.44.

But the deal still faces a significant challenge: A group of U.S. state attorneys general, including from New York and California, have sued to block the merger on antitrust grounds, arguing the proposed deal would cost consumers more than $4.5 billion annually.

New York State Attorney General Letitia James indicated the lawsuit would continue, at least in part because of what critics see as Dish’s failure to live up to pledges it had made.

“We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers, and innovation,” she said.

The Justice Department, backed by five state attorneys general, said the deal required the merging companies to sell Virgin Mobile and Sprint’s prepaid business and provide Dish with access to 20,000 cell sites and hundreds of retail locations.

Prepaid wireless phones are generally sought by lower-income people who cannot pass a credit check.

Dish has agreed to acquire spectrum, or airwaves that carry data, in a deal valued at $3.6 billion from the merged firm and pay $1.4 billion for Sprint’s prepaid business that serves about 9.3 million customers. Dish will get access to the new T-Mobile’s network for seven years while it builds its own 5G network.

T-Mobile and Dish are also required to work out a deal where T-Mobile can use Dish’s unused 600 MHz spectrum and the companies are required to use eSIM, which allows consumers to switch easily between carriers, a Justice Department official said.

SKEPTICAL LAWMAKERS

T-Mobile competes with Verizon Communications Inc and AT&T; Inc (T.N).

U.S. consumers tend to stick with one mobile carrier for years, giving companies a steady stream of cash. As more people rely on cell phones for social media, banking or news and entertainment, the lines have blurred between telecom, content and cable companies, just as so-called 5G technology promises to make mobile phones even more powerful.

Federal Communications Commission Chairman Ajit Pai said in a statement on Friday he would soon circulate a formal order supporting the deal. The FCC could vote on final approval in August or September, officials said.

The FCC agreed to give Dish more time to use spectrum it previously acquired. The company could face up to $2.2 billion in penalties and lose its spectrum licenses if it fails to meet its commitments to build its network, according to a letter filed Friday with the FCC. Dish must have a 5G network covering at least 70% of the U.S. population no later than June 14, 2023.

Dish has spent years stockpiling wireless spectrum and faced a looming March 2020 deadline to build a product using the spectrum in order to fulfill its license requirements.

A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration

Some senior lawmakers remained skeptical about the merger, including Senators Mike Lee, a Republican, and Amy Klobuchar, a Democrat, the top lawmakers on the Senate Judiciary Committee’s antitrust subcommittee.

Lee said he was hopeful the divestiture would succeed but uneasy about Dish’s dual role as a critic of the transaction and a buyer of divested assets.

Klobuchar, who is running for president, reiterated that she had wanted the deal stopped. “It looked like a bad deal then, and it looks like a bad deal today, despite the parties’ promises and this proposed consent decree,” she said. </s> The Justice Department has approved the merger of T-Mobile and Sprint under the condition that Sprint sells off several assets to Dish Network, so that Dish can become a viable fourth competitor in the US mobile carrier space.

Under the deal, Sprint must divest its prepaid business, Boost Mobile, and Virgin Mobile to Dish Network, a satellite TV provider. In addition, T-Mobile and Sprint will need to give Dish access to 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 Justice Department said in Friday's announcement.

Although T-Mobile and Sprint have cleared a major hurdle to the proposed merger, the two companies are still facing resistance from 14 state attorneys general, who filed a lawsuit last month to block the deal. They're concerned the merger would reduce competition in the wireless market and result in price increases and shoddier services for consumers.

"We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger's harm to consumers, workers, and innovation," said New York state attorney general Letitia James in a statement.

The Justice Department attempted to address the antitrust concerns by forcing Sprint to divest its assets to Dish Network, which responded to today's settlement by declaring it's entering the wireless market. The company said it's committed to deploying its own 5G broadband network capable of serving 70 percent of the population by June 2023.

In total, Dish is buying about $10 billion worth in assets from Sprint to create the carrier business. Assuming the T-Mobile-Sprint merger gets full approval, Dish will immediately take over Sprint's prepaid business, which covers about 9.3 million customers across the US.

"Dish will activate all new wireless customers on the New T-Mobile network. Existing prepaid customers will be supported on the Sprint legacy network and will eventually transition to the New T-Mobile network," Dish said.

Despite the plan, not everyone is convinced today's settlement will help turn Dish into a viable fourth competitor.

"Dish hasn't made any effort to provide real, consumer-facing wireless services that could offset the high prices of the major players," said S. Derek Turner, research director at consumer advocacy group Free Press. "The company is years and billions of dollars of investment away from doing any such thing."

Today's settlement has received the support of the FCC, which recommended the merger's approval earlier this year. With the Dish deal added by the DOJ, the FCC must now vote to formally approve the merger. Senior FCC officials say that will happen soon, but declined to give an exact time frame. It will likely be approved by the commission on party lines.

"The commitments made to the FCC by T-Mobile and Sprint to deploy a 5G network that would cover 99 percent of the American people, along with the measures outlined in the Department's consent decree, will advance US leadership in 5G and protect competition," FCC Chairman Ajit Pai said in a statement.

FCC officials pushed back on the idea that Dish will not be able compete against huge rivals like AT&T and Verizon, pointing to commitments it's made to the FCC and DOJ regarding 5G service and nationwide buildouts. T-Mobile and Sprint have made similar commitments for their part of the deal; failing to hit those targets could result in hundreds of millions to billions in fines, according to FCC officials.

Editor's Note: This story has been updated with comment from New York's attorney general. </s> More than a year after Sprint and T-Mobile announced plans to join forces, we could finally find out if this merger of wireless carriers is going to get the regulatory green light that both companies have been seeking.

Multiple reports say that a decision on the merger is coming this week, and it's looking good for the combined company that plans to bill itself as New T-Mobile. Fox Business Network says that regulators are on the verge of OKing the merger while CNBC reports that an announcement could come as soon as Wednesday (July 24).

Should T-Mobile and Sprint get the go-ahead from the U.S. Department of Justice, there will be a lot of questions the combined carrier will need to answer for current and potential customers. And while we expect a lot of those details to emerge fairly soon after the merger's approval, here are the things to keep an eye on should T-Mobile and Sprint form a combined company?

Who's going to emerge as a new fourth nationwide carrier?

This has apparently been the sticking point in the Justice Department's regulatory review up until now. While T-Mobile and Sprint have argued that joining forces is the only way for them to compete with market leaders Verizon and AT&T, regulators have worried that removing one of the Big Four carriers will lead to less choice — and potentially higher prices — for consumers.

The apparent solution? Just add a new member to the Big Four.

Based on reports, that new entry appears to be Dish, which would be in a position to snap up spectrum that a merger agreement forces T-Mobile and Sprint to divest. Dish would have access to the T-Mobile/Sprint network for a set period of time while it builds up its own nationwide network.

Deutsche Telekom, which owns T-Mobile, had been worried about Dish using its newfound access to T-Mobile's spectrum to attract a more formidable buyer — Comcast, say, which operates a mobile network of its own in the form of Xfinity Mobile. But the most recent reports suggest those concerns have either been resolved or that Deutsche Telekom is willing to live with that possibility if it means that the merger goes through.

Should the Justice Department give its blessing to the combination of Sprint and T-Mobile, we'd expect details on just how a Dish-operated mobile carrier would work and when it would launch right away.

What happens to Boost?

The Justice Department isn't the only government entity that has to sign off on the Sprint/T-Mobile merger. The Federal Communications Commission has to OK the deal, too. But it gave the FCC gave tentative approval back in May, and the fate of prepaid carrier Boost Mobile is at the center of that thumbs up.

Boost is currently owned by Sprint, using the wireless network of its parent company to provide prepaid wireless service to customers who either balk at paying the prices charged by Big Four carriers or who don't want to submit to the credit check required by postpaid wireless service. But Sprint also owns and operates Virgin Mobile US while T-Mobile controls Metro By T-Mobile (formerly known as MetroPCS). That's one prepaid brand too many as far as regulators are concerned, so New Mobile has promised to sell off Boost once the merger goes through.

It's unclear whether Boost will be swallowed up by Dish under this divesture plan or whether New T-Mobile would open the bidding to other would-be buyers. T-Mobile and Sprint have promised that it would submit a name of Boost's buyer within 120 days of the merger going through, and that Boost traffic wouldn't be slowed or de-prioritized once it has a new owner.

What happens to existing T-Mobile and Sprint customers?

Well, that's the $70-a-month or so question for current subscribers. And customers mulling a jump to New T-Mobile are going to be curious as to what rates the combined carrier will offer and what customer perks might be made available.

Back in February, Sprint and T-Mobile executives promised that rates would remained unchanged, committing to offering "the same or better rate plans" for the next three years. The companies reaffirmed that commitment in May to win the FCC's favor.

MORE: Best Cell Phone Plans: Where Sprint and T-Mobile Rank

The exact details on what that means — will you be locked in at your exact rate of service at the time of the merger for the next three years or some other approach? — are going to need to come out just as soon as the ink is dry on the merger's regulatory approval.

What about carriers that use Sprint and T-Mobile's networks?

Sprint and T-Mobile subscribers aren't the only ones who benefit from the carriers' respective networks. Both Sprint and T-Mobile also rent out space on their networks to mobile virtual network operators (MVNO), who are able to offer low-cost nationwide coverage to their customers.

It will take some time after the merger goes through to see what a combined Sprint and T-Mobile will mean for MVNOs and the people who subscribe to those lower-cost services. But hopefully we'll start to see some clarity on what a merged company will mean for customers who get their wireless service from other providers.

Already the uncertainty surrounding the merger has affected one low-cost carrier — Ting said that it's ending its contract with T-Mobile at the end of the year. Ting will continue to use Sprint's network, re-upping its contract with that carrier through September 2020, and it's also going to add Verizon as a network partner later this year.

Besides Ting, MVNOs that use the networks of either Sprint or T-Mobile include Mint, Republic Wireless, Simple Mobile, Tello and TextNow. Google's Project Fi uses both carriers' networks in addition to US Cellular. FreedomPop and Unreal Mobile both Sprint in addition to AT&T, while Consumer Cellular uses T-Mobile in addition to AT&T. US Mobile offers service through both T-Mobile and Verizon.

How will this affect T-Mobile's 5G plans?

The new 5G networking standard has been at the heart of the argument both T-Mobile and Sprint have made for joining forces — only a combined company will be able to build out a competitive 5G network fast enough, the carriers have argued. And based on media reports, that's been good enough for the Trump administration, which has indicated that it's eager for the merger to go through.

Both Sprint and T-Mobile have already rolled out 5G networks in some markets. Sprint's 5G service is now available in Atlanta, Dallas, Kansas City, Houston and Chicago, while T-Mobile's 5G service launched in six cities at the end of June. The two carriers are taken different approaches to get their 5G networks live — Sprint is relying on 2.5-GHz technology while T-Mobile is going with millimeter-wave initially before incorporating more low-band spectrum to build out coverage. </s> The Justice Department approved T-Mobile US Inc.’s merger with Sprint Corp. after the companies agreed to create a new wireless carrier by selling assets to satellite-TV provider Dish Network Corp. The landmark antitrust agreement seeks to address concerns that the combination of T-Mobile, the nation’s No. 3 carrier by subscribers, and No. 4 Sprint will drive up prices for consumers. It would leave more than 95% of American cellphone customers with the top three U.S. operators.

A deal brokered by the Justice Department will require Dish, which has been sitting on valuable airwaves, to build a 5G network for cellphone customers. To help it get started, T-Mobile will sell Sprint’s prepaid brands to Dish and give access to the combined carrier’s network for seven years. “The remedies set up Dish as a disruptive force in wireless” with the pieces needed for the company to have a cellphone service that is ready to go, Makan Delrahim, the Justice Department’s antitrust chief, said in a news conference. Critics of the arrangement include a group of state attorneys general that broke with the Justice Department and have filed an antitrust lawsuit seeking to block the more than $26 billion merger. Five states that weren’t part of the lawsuit joined the federal government in the settlement announced Friday.

“Why scramble so much to create a fourth competitor when you already have one?” said Samuel Weinstein, an assistant law professor at the Cardozo School of Law at Yeshiva University who worked previously in the Justice Department’s antitrust unit. The deal gives Dish, a satellite-TV provider, about 9 million Sprint prepaid cellphone customers and additional wireless spectrum. Those subscribers, which mostly come from its Boost Mobile business, represent about one-fifth of Sprint’s customer base. Dish’s service, which could keep the Boost brand or take on a new name, would also be able to move from pay-as-you-go plans to postpaid service, which tends to be more profitable. T-Mobile and Sprint must also give Dish access to at least 20,000 cell sites and hundreds of retail locations. The new T-Mobile must provide “robust access” to its network, the Justice Department said. The union of T-Mobile and Sprint, years in the making, would create a wireless company surpassing 90 million U.S. customers, closing the gap with Verizon Communications Inc. and AT&T Inc., which each have roughly 100 million wireless customers. It also would fulfill a long-held goal of Japan’s SoftBank Group Corp., which owns most of Sprint, and Deutsche Telekom AG, which controls T-Mobile. Shares of T-Mobile rose on the news and are trading near all-time highs. Sprint shares also were higher. Dish, whose stock price has slumped this week on news of the arrangement, were up Friday.

Federal Communications Commission Chairman Ajit Pai, who had previously backed the deal, said Friday the Justice Department settlement, coupled with T-Mobile and Sprint’s earlier commitments to deploy a nationwide 5G network, will preserve competition and advance U.S. leadership in rolling out next-generation networks. U.S. carriers have been battling for customers in the $180 billion voice-and-data market, where growth has slowed now that the companies have rolled out unlimited data plans and most Americans have upgraded to smartphones.

The federal approval for T-Mobile and Sprint caps a more than yearlong review of a combination that fell apart twice in the past five years over terms of the deal or fears that the Justice Department would object. The Justice Department, under the Obama administration, told the companies that shrinking from four to three national providers was anticompetitive. The companies tried again under Trump appointees to push the deal through, ultimately agreeing to divest assets to Dish to win approval. In its agreement with the government, T-Mobile promised not to raise prices for three years and cover 97% of the U.S. population with 5G service in three years. T-Mobile has been adding millions of customers at the expense of its rivals, pushing unlimited data plans and lower prices than the incumbents. Sprint, despite owning valuable airwaves, has been shedding millions of subscribers and has struggled to be profitable. T-Mobile surpassed Sprint to become the No. 3 player by subscribers and argued the acquisition of the smaller carrier’s airwaves would help speed its deployment of a 5G network so that it could better compete with Verizon and AT&T. Dish, which generated $13.6 billion in annual revenue last year, had about $13 billion of net debt before the deal. It will need to shell out billions of dollars in the coming years to absorb the wireless carriers’ castoff assets, build its own network and vie for customers. A group of states led by the attorneys general of New York and California are pressing ahead with an antitrust lawsuit seeking to block the combination, saying it would harm consumers. All the officials who joined the suit are Democrats; those who decided to support the Justice Department on Friday are Republicans. Letitia James, the New York attorney general, said the coalition of state officials seeking to block the deal oppose the Justice Department’s settlement. “We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers and innovation,” she said.

Mr. Delrahim said his office will share its settlement with the federal judge overseeing the states’ lawsuit. “Sometimes independent sovereigns do make independent determinations,” he said. The trial is scheduled to start in October. On Friday, T-Mobile and Sprint extended the deadline to close their deal, from July 29 to Nov. 1. T-Mobile said it expects to close its Sprint purchase in the second half of this year despite the states’ lawsuit. The Justice Department stopped sharing information with the Democratic attorneys general after they decided to file their lawsuit in June without notifying their federal counterparts, Mr. Delrahim said. “That was their choice, not ours,” he said. Under the deal, Dish will pay $1.4 billion for the Sprint customer accounts, most of which come from its Boost prepaid brand, and $3.6 billion three years later to buy Sprint spectrum licenses in the 800-megahertz range, which can travel long distances and cover rural areas. The new T-Mobile will have the option to lease back part of that spectrum for an additional two years after the airwaves sale closes. The companies have also agreed to negotiate for T-Mobile to lease Dish spectrum in the 600-megahertz range. Dish is set to start its wireless life with a base of Sprint’s pay-as-you-go customers, though carriers often struggle to keep those so-called prepaid subscribers. More than 4% of Sprint’s prepaid customers choose to drop their service or are disconnected for nonpayment each month, according to company filings. The deal creates a fake competitor, said Andrew Jay Schwartzman, a lecturer at Georgetown Law, adding that even if Dish builds out its own network it will take years. During that time, the three large carriers will be able to introduce 5G and lock in their subscriber bases, he said. “Rather than having Sprint as a weak fourth competitor, the combined companies will now face an extremely weak fourth competitor,” Mr. Schwartzman said. Sprint ended March with nearly $33 billion of net debt on its balance sheet. Even though it had more than 40 million customers, Sprint said during deal negotiations that it was in poor health and wouldn’t be able to launch nationwide 5G service without the merger. Dish has argued it can build a better network by starting from scratch. Even before he pursued a deal with the Justice Department, Dish Chairman Charlie Ergen said his business could invest capital more efficiently without the burden of old equipment and software holding back its ambitions. Dish hasn’t made public the prices or structure of the wireless plans it will sell. Senior FCC officials said on a call with reporters that they are confident the new carrier under Dish will be viable because the wholesale deal it has struck with the new T-Mobile is more aggressive than any other such arrangement the carrier and Sprint currently have. Its terms give Dish the financial ability to compete in the prepaid market against T-Mobile’s Metro brand, they said. The settlement also included provisions designed to make sure Dish actually builds the promised infrastructure. Among other penalties, the satellite company agreed to pay the government up to $2.2 billion if it fails to meet its network expansion requirements. Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Sarah Krouse at sarah.krouse@wsj.com
The U.S. Department of Justice approves a $26 billion merger between T-Mobile and Sprint. If finalized, they will become the third-largest mobile network operator in the nation.