Mobile and Sprint Modify Merger Plans as DOJ Leans Against Deal


Unnamed sources close to the DOJ told Bloomberg the agency isn't satisfied with concessions that were offered to get the deal done because they don't go far enough to resolve antitrust concerns.

Sprint Corp and T-Mobile US Inc has won the support of the chairman of the USA telecommunications regulator but will require a series of changes to their proposed $26 billion merger, including selling Sprint's Boost Mobile cell service.

A merger between the nation's third and fourth-largest wireless companies would leave just three major US carriers, meaning T-Mobile and Sprint could someday raise prices once they don't have to compete with one another for customers.

The buyout was all but given the green light today when Chairman Pai said he would recommend approving the $26.5 billion deal.

The milestones will be verified by drive testing, not coverage maps, which will be funded by T-Mobile with oversight by an FCC-approved third party. Within three years, the "New T-Mobile" will market in-home broadband service to at least 9.6 million eligible households, of which at least 2.6 million will be in rural areas. "These consequences, which could include total payments to the U.S. Treasury of billions of dollars, create a powerful incentive for the companies to meet their commitments on time", the FCC chairman said in his statement backing the merger.

Pai's statement was quickly supported by fellow Republican commissioner and Pai's former aide Brendan Carr, though Democratic commissioner Jessica Rosenworcel was notably less impressed. In addition to their own offerings, both Sprint and T-Mobile have wholly owned subsidiaries - Metro by T-Mobile in the case of T-Mobile and Virgin and Boost in the case of Sprint - that rely on their parent networks for service.

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Under the terms of the agreement, the companies also committed to not raise their rates for three years after the merger.

Now, with T-Mobile the most innovative and fastest growing of the four major US wireless operators, it no longer needs a merger to survive.

Critics of the merger are concerned that removing one of the four big wireless carriers in the USA will stifle competition and hurt consumers.

As for the sale of Boost Mobile, Legere says that T-Mobile and Sprint have yet to find a buyer for the pre-paid network, but he notes that they're looking for a "serious, credible buyer with all the assets needed to run and grow the Boost business".

In a filing with the FCC on Monday, the companies pledged to sell Boost Mobile, a prepaid wireless provider. "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". "It hasn't worked out well for consumers", she wrote on Twitter. The states have signaled they may sue to block the deal even if the Justice Department clears it. "But now the FCC wants to bless the same kind of consolidation for wireless carriers". It is a straight up illegal merger", he tweeted, adding: "Any honest assessment of the market concentration numbers that come from a standard antitrust analysis and application of the Department of Justice's merger guidelines leaves you with one and only one actual conclusion.

As for the commitments themselves, they appear entirely focused on a promise to roll out 5G networks.