It looks as though the $26.5 billion T-Mobile/Sprint merger could cross the finish line as early as tomorrow, triggering the New T-Mobile’s “Day Zero” as planned.
T-Mobile announced on March 19 that it had been in communication with all 16 banks and it had not received any notification that any of them were unprepared to fund their commitments to support the transaction’s closing.
Yesterday, Bloomberg, citing unidentified people familiar with the matter, reported that the banks were formally notified on Monday that they need to make the funds available on April 1 so that the companies can close the deal. The 16 banks will have to provide $23 billion of loans after the Covid-19 outbreak disrupted plans to sell the debt to third-party investors, according to Blooomberg.
April 1 has been the company’s targeted closing of the transaction, which it refers to as “Day Zero,” though it hasn’t always been a sure thing. The California PUC commissioners are scheduled to vote on a proposal at their April 16 meeting; the CPUC earlier this month issued a proposal to approve the merger with conditions and sought public comment.
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In a blog posted today, Steve Blum, president of Tellus Venture Associates, spelled out how recent filings by the two companies set the stage for them to close the deal without CPUC permission, possibly as early as tomorrow.
Blum previously noted T-Mobile’s repeated assertions that it doesn’t need CPUC permission to take over Sprint’s mobile business, and that the relatively trivial matter of transferring Sprint’s California wireline certification wasn’t controversial enough to warrant all the regulatory attention it was getting.
T-Mobile did not immediately respond to a request for comment.
With markets going into a tailspin since the coronavirus pandemic took hold, it stands to reason the companies want to finalize the deal sooner rather than later—something they’ve been wanting even before the pandemic.
In a March 23 report, investment analyst Craig Moffett of MoffettNathanson said that one last hurdle was the ongoing Tunney Act review. A decision by Judge Timothy Kelly was expected by the end of last year. The Tunney Act calls for a separate review of the Department of Justice’s remedy, and in this case, it’s complicated all the more so with COVID-19.
Dish Network, set up to become a fourth facilities-based carrier, plays a central role in the DoJ’s remedy, and its shares “absolutely cratered” amid the coronavirus crisis, Moffett noted.
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Some investors have asked whether Dish will be held to its current timetable for completing its new 5G network given the pandemic, New Street Research policy analyst Blair Levin wrote in a March 29 note for investors.
“We have no insight into whether DISH will have to make such a request, other than to observe the obvious, which is that all timetables, as FCC actions on other matters have reflected, are subject to some adjustment,” Levin wrote. “If DISH requires such an adjustment, however, we think the governing document will be its agreement with the FCC in which there is an Act of God provision allowing for extension ‘due to unanticipated circumstances beyond the company’s control,’ which we think applies.”
Asked about its plans last week, a Dish spokesperson, without going into detail, told Fierce that the company remained committed to completing the buildout of its 5G network.