Uncertainty over the outcome of its proposed merger with T-Mobile US amid a rising tide of 5G deployments has put Sprint in the uncomfortable position of staying on course while it weighs options as a standalone or combined entity.

Almost 18 months have passed since it inked that $26.5 billion merger deal with T-Mobile US, and yet there’s nothing on the immediate horizon that indicates that process will reach a conclusion anytime soon. A group of 18 state attorneys general have filed a joint lawsuit to block the merger, which has already garnered support from the Justice Department (DoJ) and a majority of commissioners at the Federal Communications Commission (FCC).

DoJ officials are reportedly in discussions with the attorneys general to alleviate their respective concerns, but there has not been any breakthroughs yet and the lawsuit isn’t scheduled to reach a trial start date until Dec. 9. That means there’s a strong likelihood that Sprint will be heading into 2020 with a heavy dose of ambiguity surrounding its 5G strategy and plans, if any, for further investments in the network.

Sprint wasn’t the first domestic operator to deploy 5G, but with nine markets now activated and a coverage area considerably larger than AT&T, T-Mobile US, and Verizon it is providing the most robust 5G service today, according to analysts that shared their perspectives with SDxCentral. Sprint says its 5G network covers 2,100 square miles and up to 11 million people.

“I don’t think that they’re behind at all," said Daryl Schoolar, principal analyst at Ovum. "The fact that they have mid-band spectrum and they can actually show coverage stands out to me. [Sprint] may not have launched first but they actually have closer to a large scale 5G network that’s closer in line to the rest of the world versus the other [operators] who are deploying” on millimeter-wave (mmWave) spectrum. “They are really in a better position than any of the other U.S. competitors because of that spectrum," Schoolar added. "It’s like finally their ship has come in. They’ve had that [spectrum] forever."

Indeed, Sprint’s massive nationwide 2.5 GHz spectrum licenses are among its most valuable assets and they factor heavily into T-Mobile US’ interest in acquiring the company to bolster its 5G vision.

Sprint’s spectrum holdings and network technology, namely massive multiple-input, multiple-output (MIMO) antennas, put it firmly in the driver’s seat, explained Earl Lum, founder of independent market research firm EJL Wireless.

“We’re in a very interesting situation for the country and for the operators that are trying to migrate and evolve to 5G now in the United States,” he said. “We’re in a quandary for the U.S. market in wireless. Small cells are a pain in the butt and it’s very difficult to deploy, and the whole 5G strategy is based on that right now in the [United States] except for Sprint, so there’s a lot riding on this whole deal."

The merger is also critically important for T-Mobile US because without that mid-band spectrum it’s “going to be in the same sinking boat as AT&T and Verizon for 5G” with too much reliance on mmWave spectrum and small cells, Lum added.

Sprint can justifiably claim the lead on 5G until AT&T and Verizon deploy nationwide 5G coverage, said William Ho, founder and principal analyst at 556 Ventures. “Sprint does not have national 5G capability simply because they’re only in nine markets and they don’t have capex to build out in all the 2.5 GHz markets.”

Sprint hasn’t announced any plans to deploy 5G service beyond the initial nine markets that are already live, and all signs point to the company effectively being in a holding pattern as it awaits the outcome of the proposed deal with T-Mobile US. “I would doubt you’d see another market. There’s no point in doing it” and the operator doesn’t currently have access to the financing necessary to do so, Lum explained.

Sprint and T-Mobile US are “both kind of stuck in a no-mans land which isn’t good for either company,” he added. “They both have a lot to lose because if the deal doesn’t happen then T-Mobile’s 5G strategy is completely hosed.”

Sprint’s finances have been a drag on the company for years. The company closed its most recent quarter with a reported $35 billion in long-term debt and the current portion of long-term debt reported during the quarter equated to nearly $11.3 billion. And to put its mid-band spectrum holdings in perspective, Sprint puts a value of $41.5 billion on its licensed spectrum holdings.

Marketing efforts and promotions don’t appear to be moving the needle either. Customer acquisition costs jumped 26% during the 12-month period ended in June 2019, and yet it reported a net loss of postpaid customers every quarter during that period culminating in a total decrease of 377,000 postpaid subscribers. Sprint did not respond to a request for comment.

“They’re building out based upon wherever they can commit capex” and that’s prevented Sprint from making necessary investments in its network for many years, Ho said.

Schoolar says it's in Sprint’s best interest to continue adding 5G to more markets because it’s an important asset regardless of its corporate backers — whether that be T-Mobile US' parent company Deutsche Telekom if the merger is consummated or its current majority owner in Japan's SoftBank.

Sprint’s troubles can be traced back almost 15 years to the $35 billion merger with Nextel that’s now roundly considered one of the worst deals ever on that scale. The company has made numerous missteps since then that have compounded its problems. “They’ve often been catching up and it seems like they’ve been making decisions not from a great point of strength,” Schoolar said.

Mid-band spectrum is the best and most competitive asset that Sprint has now, he said. Sprint gained access to that swath of nationwide 2.5 GHz spectrum when it acquired Nextel and then Clearwire in 2013.

If, for whatever reason, Sprint doesn’t end up in the hands of T-Mobile US its options will be severely limited. “If it doesn’t go through it really comes down to expanding the footprint and how do they pay for it,” Ho said. SoftBank hasn’t shown an appetite to invest further, and Ho estimates it would cost about $5 billion per year to continually upgrade the network.

Even if Sprint is able to secure additional debt financing, which is an open question, network improvements may not have a positive impact on Sprint’s business for years, Ho explained. “From a subscriber standpoint it’s pretty dire,” he said. “The subscriber losses are like insane and they’ve been trying to get everybody on new handsets with promotions. … It’s a brand that’s been hit and they still need to rebuild that brand.”

Lum suggests that SoftBank might just write off its entire Sprint investment and let the company go bankrupt or shut it down if the merger fails. “I wouldn’t put another dime into the network," he said. "They’ve already lost how many billions of dollars? It’s a bad investment. Wall Street will forgive them on a one-time charge. It’s this ongoing losing billions of dollars every quarter that they’re getting tired of.”

Schoolar offered up another option that may sound far fetched at first glance but it’s not completely out of the question considering the settlement agreement the DoJ worked out to set the table for Dish Network to become a viable 5G operator. “Maybe [Sprint] should sell themselves to Dish if Dish wants to get in the business that bad,” he said.

That would be a major revision to the current agreement that calls for Sprint to sell its prepaid business to Dish Network, but considering everything that’s happened up to this point everything should be on the table.