T-Mobile US Inc.’s $26 billion takeover of rival Sprint Corp. cleared a key hurdle today after the Justice Department put its seal of approval on the deal.

The decision, which comes over a year after the companies set the transaction in motion, was delayed because of concerns over its market impact. Critics have argued that the deal will reduce competition and raise prices for consumers. In a bid to stave off that risk, the DOJ made its approval contingent on Sprint selling a number of assets to Dish Network Corp., which is now entrusted with filling the competitive void set to be left by the merger.

Dish’s move into the wireless market has been a long time in the making. The company picked up billions of dollars worth of broadband spectrum rights over recent years and, as part of the deal with Sprint, will purchase even more. 

Dish is buying some of the spectrum Sprint owns in the 800-megahertz frequency band. That’s one of the frequency bands that have been set aside for the high-speed 5G mobile broadband standard currently rolling out worldwide. Dish will also take over the Boost, Virgin Mobile and Sprint-branded prepaid businesses along with their 9.3 million subscribers, as well as at least 20,000 cell sites.

It will take a while for the company to cobble together these assets into a functioning nationwide network. To ease the transition, the agreement with the DOJ guarantees Dish “robust access” to T-Mobile’s infrastructure for at least seven years.

T-Mobile said the merger will enable it to lower prices, as well as better compete with bigger rivals AT&T Inc. and Verizon Communications Inc. The DOJ, in turn, hailed the deal as a way to put currently underutilized spectrum bands to use.

“The deal with Dish Network is a tremendous victory for T-Mobile and Sprint, which now expect to complete their merger before year’s end,” Tammy Parker, a technology analyst at data and analytics firm GlobalData, said in emailed comments. But she also said other carriers shouldn’t be too worried about new competition.

“Rival mobile operators are likely breathing a sigh of relief,” Parker said. “Although the new T-Mobile is gaining scale that will enable it to compete more aggressively, the entry of Dish as a fourth national operator is not a significant threat. Dish has no track record in building out a nationwide wireless network or conducting business as a wireless MVNO or network operator.”

But the asset sale hasn’t fully alleviated concerns about the potentially negative market consequences. Gigi Sohn, a former Federal Communications Commission official, told Axios that “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.”

Those concerns are shared by a group of 13 state attorney generals plus the District of Columbia suing to block the merger. Moreover, the deal still has to be signed off by a federal court and the FCC. Securing the latter approval may turn out to be the smallest of the obstacles currently facing T-Mobile and Sprint, since FCC Chairman Ajit Pai announced in May that he would vote to let the deal go through.

The outcome of the process will also affect Dish’s wireless ambitions. As part of the DOJ-mandated asset sale, the company has agreed to pay $1.4 billion for Sprint’s prepaid businesses and $3.6 billion for the spectrum rights.

Photo: T-Mobile