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FCC clears T-Mobile/Sprint merger, with remedies

Regulators have officially approved the deal, but Attorney Generals’ lawsuits are still pending.

Background: T-Mobile and Sprint announced plans to merge in June 2018. 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 (85% of the rural population), and 99% of Americans within six years (90% of the rural population). They also committed to rollout a 5G home product as an alternative to fixed broadband. The Department of Justice, which approves mergers on antitrust grounds, gave the green light in July 2019. It required the merged entity to sell Boost Mobile, Virgin Mobile, and Sprint Prepaid to Dish, which will also gain some of Sprint’s spectrum and become a fourth MNO. T-Mobile and Sprint will have to open up more than 20,000 cell sites and dozens of retail locations to Dish. In addition, T-Mobile has to offer Dish "robust access" to its mobile network for seven years while the latter creates a 5G network of its own.

The FCC joins the DoJ: FCC commissioners finally voted on the merger in October 2019, with Democrat commissioners dissenting. This week, the FCC formalised the approval, which it believes to be ‘in the public interest’. Should the parties not honour their commitments within six years, they will have two make payments for over USD2bn, and continue to pay until they have fulfilled their commitments.

Is this it then? Now that the DoJ has approved on antitrust grounds, and the FCC has done the same on public interest grounds, the merger can go ahead. However, the looming threat of a lawsuit from a growing number of State Attorney Generals could still get in the way. 11 AGs filed a lawsuit in June 2019, and were joined by seven more AGs by September 2019. The two companies could still decide to delay the merger while litigation is ongoing.