The regulator considers the merger passes the ‘public interest’ test.
Background: T-Mobile and Sprint announced plans to merge in June 2018. The two MNOs have been rumoured to merge several times in the last few years, but plans repeatedly fell through. T-Mobile’s buyout of Sprint is now under scrutiny of the relevant authorities, before it can be finalised. The two operators made commitments to facilitate the approval, including not to raise prices for three years, to divest Boost Mobile (one of Sprint’s prepaid wireless brands), and to build a 5G network to cover 97% of the US within three years (and 85% of the rural population), and 99% of Americans within six years (and 90% of the rural population). Specifically, companies have committed to rollout a 5G home product as an alternative to fixed broadband.
The FCC’s verdict: When it comes to mergers, the FCC has to rule on whether they are ‘in the public interest’. On 20 May, the FCC’s chairman Ajit Pai issued a statement saying he believes the transaction is in the public interest in light of the commitments, and recommends its approval. Pai sees this as an opportunity to speed up 5G rollout. He also noted that companies could pay billions of dollars if they fail to honour their promises.
The DOJ is still a hurdle: Despite the FCC’s positive decision, the deal is not yet sealed since the Department Of Justice also needs to approve it. The DOJ decides on antitrust grounds, thereby taking into account different factors from those considered by the FCC. While it is rare for the two bodies to diverge, it is reported that the DOJ believes the remedies do not go far enough in easing competition concerns. Several states attorney generals are also watching the merger, and signalled they could sue to block it even if the DOJ cleared it.
