- The DoJ said it will not seek an injunction to block T-Mobile’s acquisition of UScellular
- The announcement came after T-Mobile earlier this week said it would scrap its DEI programs
- The DoJ said its investigation did raise concerns about the state of competition in wireless and the availability of spectrum for fueling competition
T-Mobile cleared a major hurdle in its bid to purchase most of UScellular’s wireless assets, with the U.S. Department of Justice (DoJ) on Thursday saying it won’t seek an injunction to block the deal.
The move comes shortly after T-Mobile agreed to wipe out its diversity, equity and inclusion (DEI) programs, which Federal Communications Commission (FCC) Chairman Brendan Carr said was necessary for anyone to get deals approved by his agency. The deal still awaits final FCC approval.
While the DoJ said it’s not going to try and block the deal, it did express concerns about the state of competition in wireless and the availability of wireless spectrum needed to fuel competition.
“With respect to the potential impact on consumers, for years, Americans have witnessed the too-familiar pattern of local or regional companies that discern and cater to their customers’ needs vanishing in favor of the ‘one size fits all’ approach of national brands,” said Assistant Attorney General Gail Slater in a statement.
UScellular couldn't keep up
Whereas the Big 3 carriers focused on serving highly populated metropolitan areas, UScellular’s strategy was to zero in on more rural areas, where it identified consumers as “Heartland Families” or “Farmtown Frugals.” That proved to be challenging, however, when bigger carriers and cable companies started horning in on its territory.
The DoJ considered how UScellular subscribers would fare if UScellular continued as a business without completing the sale to T-Mobile. “That aspect of the investigation made clear that, due in part to its limited regional footprint and unique structural limitations, UScellular simply could not keep up with the escalating cost of capital investments in technology required to compete vigorously in the relevant market,” Slater said.
In contrast, T-Mobile has publicly committed that it will integrate the two networks in a way that provides UScellular customers with faster data speeds while T-Mobile customers will obtain broader coverage in rural areas.
“Accordingly, the department concluded the loss of the local offerings that UScellular customers value was outweighed by the immediate improvements in network quality promised by this proposed transaction,” Slater said.
T-Mobile announced in May 2024 that it planned to buy most of UScellular for about $4.4 billion, but UScellular CFO Doug Chambers said during the company’s Q1 2025 earnings call that the purchase price is contingent on UScellular achieving certain performance targets that it didn’t expect to reach, so the actual size of the transaction is going to be closer to $4.3 billion.
Implications for EchoStar
Slater didn’t mention EchoStar in her statement, but she alluded to concern that continued spectrum aggregation by the Big 3 threatens to impede the path for “a fourth national player” to emerge and challenge the incumbents. As a condition of the T-Mobile/Sprint merger, Dish Network, now under EchoStar, was designated a fourth player. It then acquired Boost Mobile and agreed to 5G network buildout terms.
But now EchoStar’s future is uncertain. FCC Chairman Carr has threatened to take away its spectrum licenses, launching investigations into the company’s 5G buildout obligations and use of 2 GHz/AWS-4 spectrum. EchoStar said those investigations created a “dark cloud” of uncertainty that threatens its very existence.
In a note for investors today, New Street Research policy analyst Blair Levin said the DoJ and FCC don’t appear to be on the same page when it comes to competition in the wireless sector. For one thing, FCC Chairman Carr has indicated he’s OK with just three major wireless players.
Based on the DoJ’s statement, it likely has concerns about FCC actions that could force EchoStar to end its efforts to become a viable fourth wireless network. “While the statement does not mention the FCC, it appears that both the long-term civil servants in the Anti-Trust Division and the new leadership have concerns about the way that the FCC is currently making it more difficult for EchoStar to succeed in building out a fourth network,” he said.
While it doesn’t look like the DoJ will weigh in opposition to what Carr is doing with the FCC proceedings, “we think the DoJ may be a force within the Administration deliberations urging a settlement that allows EchoStar to proceed with current plans without going into Chapter 11,” Levin said.
Bottom line, according to Levin: The DoJ language gives EchoStar political capital on the Hill and with the White House in the short-term battle with Carr. Longer term, the DoJ statement raises concerns about it allowing the financially optimal deal in terms of spectrum sales, but in the end, “we think the odds favor EchoStar ultimately being able to sell its spectrum to the highest bidder,” Levin said.