AH Softbank Sprint T-Mobile Merge 1.1

Sprint/T-Mobile Deal to have “Lengthy Approval Process”

July 15, 2014 - Written By Alexander Maxham

The much rumored, Sprint/T-Mobile deal isn’t quite official just yet, as the two sides are ironing out the last bits and pieces of the deal. But we’re hearing that Softbank’s CEO, Masayoshi Son is telling the banks that are financing the $32 billion deal that they’ll need them to commit financing for “a longer-than-usual amount of time”. Since they are expecting a pretty “lengthy approval process” between the powers that be in the US and in Japan. We’ve already heard from the FCC and that they are not in favor of this deal, but that could change if Son has the right argument for the FCC. 

If the deal does fall through, which is pretty likely since the FCC doesn’t want any less than four national carriers, T-Mobile would get a breakup fee, which we are hearing is around $1 million, or more. Back in 2011, when AT&T attempted to buy T-Mobile, the FCC and DOJ blocked it and T-Mobile got a boatload of spectrum as well as decent sum of cash. Which T-Mobile used to beef up their network, which was really needed.

Right now, Son’s argument is that the #1 and 2 wireless carriers in the country – that’s Verizon and AT&T – both have double the subscribers of Sprint and T-Mobile. Making it difficult for his Sprint and T-Mobile to compete with Verizon and AT&T. But having a stronger third carrier – rumor was it’d be renamed Softbank USA – would be able to compete as it’d also have around 100 million subscribers. Bringing it within 10-20 million of what Verizon and AT&T have. Now I can see where his argument is headed, but I don’t know if the FCC and DOJ are going to agree with him. I would love to see four strong carriers, but that’s not going to happen anytime soon. So three might be our best bet.

There’s also the spectrum auction next year, which the rules have changed a bit. The FCC has changed them so that it’s more fair to those smaller carriers, like Sprint and T-Mobile, when competing against Verizon and AT&T. Which makes perfect sense to me.