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New details cause FCC to pause T-Mobile/Sprint merger for third time

March 8, 2019

he FCC has stopped the clock on a proposed merger between wireless carriers Sprint and T-Mobile. The agency said it has received “significant new information” regarding the deal and has opened up a three-week period ending March 28 for public comment. The pause comes on day 122 of the 180-day review period the FCC holds for mergers. 

 

Lawyers from both Sprint and T-Mobile have reportedly been in talks with FCC Chairman Ajit Pai this week to discuss the merger simulation model and what assumptions were used in the model, according to a report from Seeking Alpha. 

 

It’s the third time that the FCC has paused the 180-day “shot clock” on the merger. The idea of merging the two companies together was bounced back and forth for some time, but the formal proposal was sent to the FCC in January 2018. The FCC paused the review process on Sept. 11 when the companies submitted new documents, including a “substantially revised” (PDF) network engineering model and new economic modeling for the combined company. Review of the deal got underway again on Dec. 4, at day 55 of the review timeline.

 

The FCC suspended the merger again in January 2019 during the partial government shutdown. During the shutdown, another scandal popped up to momentarily threaten the merger’s chances of moving forward. An investigation by The Washington Post found that nine high-ranking T-Mobile executives stayed at the Trump International Hotel in Washington, D.C., the day after the merger was announced, and the carrier’s top executives have continued to stay at the hotel since then.
 

In the meantime, opposition to the merger gained momentum when the Wireless Internet Service Providers Association (WISPA) joined a coalition of rural wireless providers that oppose the merger. The 4Competition Coalition is comprised of 25 organizations, including WISPA, Dish, C Spire and the Rural Wireless Association (RWA). The coalition has argued that the merger, which would reduce the number of nationwide wireless carriers to from four to three if successful, would hamper rural consumers’ access to wireless service. “The combined company would have significant new incentive and ability to raise prices and preemptively stamp out competition from newcomers. And the merger would result in the loss of tens of thousands of jobs in the process,” the coalition claims on its website. 

 

Earlier this week, T-Mobile filed new plans for the combined company to provide residential broadband service. T-Mobile CEO John Legere seemed to respond to the opposition in a blog post this week, which claimed that the combined company will pose a competitive challenge to cable broadband providers.

 

“We’ll give millions of Americans—especially those in underserved rural areas—more choices and options for connecting to the internet and participating in the digital economy,” Legere wrote. “With the New T-Mobile and our unique 5G capabilities, we’ll be able to offer a fast and reliable alternative for in-home broadband.” 

 

T-Mobile and Sprint are hoping for the merger to be approved by the second quarter of 2019. In late 2018, analysts at Wells Fargo gave the proposed merger a 70% chance of approval. Since then, the deal has received approval from the Committee on Foreign Investment in the United States and the departments of Defense, Homeland Security and Justice. Wall Street analysts at Cowen also announced in 2018 they expect regulators to approve the merger between Sprint and T-Mobile by the middle of 2019, and believe the financials of the merged company will be better than Sprint and T-Mobile executives have predicted.

 

The prospects of the merger have been further complicated by a New York Attorney General’s Office probe into the deal and how it might impact prepaid service offerings by the two companies. The New York Attorney General’s office asked the FCC in 2018 for all materials T-Mobile has submitted to the agency since announcing the merger, and it plans to share those materials with other state attorneys general that are investigating the merger. 

 

The FCC said it will resume its review on April 4. From there, it will have less than 60 days to approve or reject the plan.

 

Source: https://www.fiercewireless.com/regulatory/new-details-cause-fcc-to-pause-t-mobile-sprint-merger-for-third-time

 

 

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