Sprint, T-Mobile Deal Tested M&A Attorneys Patience, Persistence

T-Mobile USA Inc.’s $26.5 billion acquisition of Sprint Corp. seemed close to getting final U.S. approval when states attorney general sued to block the deal in June 2019.

T-Mobile didn’t just enlist an all-star team from six different law firms to defend the deal; the telecom giant’s defense strategy included leasing an entire floor of office space in midtown Manhattan where all the lawyers could work together just blocks from the courthouse where the case was to be heard.

“We ate our meals together. We had deep face-to-face conferences together,” Steven Sunshine, a partner at Skadden, Arps, Slate, Meagher & Flom LLP who litigated the merger case on Sprint’s behalf, said.

The collaborative workspace was just one way the successful legal campaign to get the merger approved proved to be a deal like no other for the legions of attorneys involved.

Attorneys from across more more than dozen different law firms worked to move the merger through reviews at the Federal Communications Commission and the Justice Department. Firms orchestrated a multi-faceted public relations strategy to educate consumers, members of Congress, and public interest groups about the deal’s merits.

“It was absolutely by far the most challenging and complex deal of my career so far,” said Brandon Parris, a partner at Morrison & Foerster LLP who served as counsel for Sprint and its owner Softbank Group.

“This was a deal that utilized hundreds of attorneys from almost every office of my firm around the globe,” Parris said. " So it was a huge undertaking from that perspective. It’s one of the largest M&A deals in my firm’s long history,” he added.

Regulatory Rounds

The merger cleared the last regulatory hurdle Thursday when the California Public Utilities Commission’s voted unanimously to approve the combination of the U.S. nation’s third and fourth largest wireless carriers.

Few analysts and industry spectators thought such a feat was possible when the deal was announced in April 2018.

The possibility of further shrinking an already concentrated telecom market, with AT&T Inc. and Verizon Corp. as the other two leading wireless carriers, had already been dismissed by regulators in the Obama Administration when Sprint and T-Mobile mulled a potential deal in 2014.

Once announced, T-Mobile’s renewed attempt for a deal with Sprint faced fierce opposition from members of Congress and public interest groups, with top Democratic senators urging regulators to block the merger.

“It was clear from the outset that it would be a lot of work to get the deal done,” Mark Nelson, a partner at Cleary Gottlieb Steen & Hamilton LLP who advised on the deal, said.

Attorneys across firms worked to create a unified message on why the deal, which would allow the new T-Mobile to better compete against Verizon and AT&T, could help the U.S. in the race to 5G, the next generation of wireless technology.

“I think there were more than 500 letters of support from different third party organizations and leaders,” said Trey Hanbury, a partner at Hogan Lovells LLP who advised T-Mobile throughout multiple government reviews.

“We had op-eds. We did white papers in collaboration with academic researchers. We did at least three economic impact studies for the employment that would be generated and call centers around the country that would open following the merger,” Hanbury said.

The deal faced a lengthy FCC review but Chairman Ajit Pai ultimately recommended deal approval May 2019 with conditions, including selling Sprint’s prepaid brand, and pricing commitments.

Attention then turned to the DOJ and its antitrust chief Makan Delrahim.

Unlike Any Other

Delrahim was open to the merger if Sprint and T-Mobile would help enable a new wireless competitor.

Attorneys started working out the terms of an extensive asset selloff plan that would establish Dish as the new fourth wireless competitor.

Getting involved during the regulatory approval phase was a new experience as an M&A lawyer, said Morrison & Foerster’s Parris .

“However, on this deal, it was all hands on deck for the duration, including through the regulatory approval phase, to the point where I was participating in meetings with the DOJ Assistant AG, Makan Delrahim, in advocating for approval of the deal – something that I am not accustomed to,” he said.

Last Hurdle

The DOJ eventually signed off on the deal in July 2019, ordering in a settlement with Sprint and T-Mobile that required the companies to sell off various spectrum assets and Sprint’s pre-paid brand Boost to Dish.

By that time, there was a new obstacle: the state attorneys general lawsuit in New York federal court, which culminated in a December 2019 trial.

A team comprised of six outside law firms helped lead the merger case on Sprint and T-Mobile’s behalf, with in-house counsel at T-Mobile directing the multi-firm litigation team.

The company’s “in house lawyers did an excellent job of corralling the team, giving us all opportunities to contribute and making sure that we were all working together and moving in the same direction,” said Karen Lent, a partner at Skadden who represented Sprint throughout the multi-state litigation.

In the Clear

Working out of T-Mobile’s leased office space allowed all the lawyers and company representatives involved in the case to meet throughout trial.

“We were able to walk down the hall to say, hey, what are you doing with this witness? Or, hey, it would help my argument if you were able to cover this particular topic with your witness, as well,” Skadden’s Sunshine said.

Merger Win

A two-week merger trial with multiple witnesses, including economic experts and corporate executives, ended Jan. 15. Court approval followed less than a month later.

In a 173-page opinion,U.S. District Court Judge Victor Marrero dismissed the states’ argument that the deal would hurt competition in the wireless industry.

“The duration of the review process really did strike me as extraordinary,” Hogan Lovell’s Hanbury said.

“I would definitely call it a highlight of my career,” he added.