Report says DOJ may try to block T-Mobile/Sprint deal

Ruben Fields
May 21, 2019

Not so fast: Earlier Monday morning, FCC Chairman Ajit Pai indicated that he was going to encourage commissioners to vote to approve the merger between T-Mobile and Sprint.

CFF's Chairman also announced that he is recommending approving the T-Mobile/Spring merger.

The two statements improve the chances that Sprint and T-Mobile can realize a long-sought goal of combining forces, although the Justice Department still has an opportunity to weigh in on the matter. Those include a commitment to deploying a 5G network that would cover 97% of the USA population within three years of the closing of the merger and 99% within six years.

For the past four years, T-Mobile and Sprint have been trying to merge together.

In today's press release, T-Mobile CEO John Legere stated that the carrier is committed to offering its 5G network coverage to 97 percent of the USA population within three years after the merger with Sprint takes place. The combined company would commit to an even more aggressive rollout.

Shares of the two companies jumped following Pai's announcement.

"Even with the conditions announced today", said Phillip Berenbroick, senior policy counsel at Public Knowledge, "the merger continues to be illegal under the antitrust laws and contrary to the public interest".

"I don't understand how the mere spinning off of one of three prepaid services would satisfy (Pai), given all the evidence in the record that post-paid (wireless) prices will go up", said Gigi Sohn, who held a senior FCC position during the Obama administration. WISPA members serve almost 4 million individuals in the areas T-Mobile and Sprint have reportedly committed to serve. "So a meaningless and unenforceable promise to just tread water where we are now is a sad joke, and nothing more". In a statement, Pai said he was also swayed by their pledge to deliver 5G wireless and broadband service to the majority of Americans in the first few years of their merger.

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Winning Pai's support required Sprint and T-Mobile to modify some of the terms of the deal to address concerns about 5G deployment and rural coverage, which the two companies spelled out in a letter to the FCC. "Plus there are the price controls, rural buildout, 5G buildout overall and also, an MVNO (Mobile Virtual Network Operator) deal for Altice to help strengthen cable as a wireless competitor".

The companies also agreed to divest Sprint's Boost Mobile prepaid division within 120 days of the closing of the merger, a move created to address potential competitive issues in the prepaid wireless segment.

Specifically, they agreed to divest Boost Mobile, a subsidiary of Sprint that offers pre-paid wireless service. T-Mobile is based in the Seattle area. "Failure to meet New T-Mobile obligations will trigger severe, increasing, and continuing voluntary contributions that will make failure prohibitively expensive and incentivize New T-Mobile to meet its commitments", the companies said.

The sale will include the brand name, any active accounts and dedicated Boost assets and staff but no wireless spectrum. "Additionally, T-Mobile and Sprint have guaranteed that 90 percent of Americans would have access to mobile broadband service at speeds of at least 100 Mbps and 99 percent would have access to speeds of at least 50 Mbps".

Sprint to say goodbye to Boost Mobile?

The speed gains will come largely from mid-band spectrum.

Later on Monday, fellow FCC Commissioner Brendan Carr signaled his support for the deal.

Rosenworcel acknowledged as much in a second tweet: "We've seen this kind of consolidation in airlines and with drug companies. It hasn't worked out well for consumers", she wrote on Twitter. The FCC is not requiring any spectrum divestitures from the carriers. "I have serious doubts".

While the DoJ approved that CenturyLink-Level 3 purchase, it has been notably less happy about the T-Mobile/Sprint merger.

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