T-Mobile Getting Bolder About Sprint Deal, Revises Closure Timeline

T-Mobile is becoming bolder about its proposed merger with Sprint and believes the tie-up attempt is progressing even better than originally anticipated, a senior company official revealed on Friday. While speaking at today's Morgan Stanley European Tech, Media & Telecom Conference in Barcelona, Spain, T-Mobile Chief Financial Officer Braxton Carter said the two telecom giants only have one major regulatory hurdle to clear before they can start combining their operations. That obstacle is a series of depositions handled by the United States Department of Justice that already started, with the industry veteran being convinced the process will be resolved "in a few weeks."

As a result of that state of affairs, T-Mobile and Sprint may be able to merge as early as the first quarter of 2019, though they still deem the second-quarter closure more likely, Mr. Carter said. The two firms already delivered some 25 million pages of documentation to the DOJ's antitrust division, in addition to filing a 600-page public information statement with the Federal Communications Commission, the veteran executive revealed, adding that the duo also held productive talks with a number of other federal agencies. While the T-Mobile CFO did not provide many details on the matter, the Federal Trade Commission is believed to be another regulator that was involved in Washington's approval process.

Background: Originally announced this spring, T-Mobile and Sprint's merger hasn't faced significant opposition from the federal government so far. The companies are arguing that they'll actually bring more competition to the wireless space by combining their operations, primarily by joining their 5G rollout efforts. What remains are concerns about the fate of the prepaid market should the big four drop to a big three, though both T-Mobile and Sprint already vowed to continue operating their prepaid brands with no significant consolidations in the space. T-Mobile even rebranded its MetroPCS unit into Metro by T-Mobile and started offering more aggressive plans on a national level in response to the criticism.

Both T-Mobile and Sprint already signaled they wouldn't be too open-minded about the idea of agreeing to major concessions in return to having their merger approved. The duo is still facing some vocal criticism regarding the near-term impact that the proposed deal could have on the job market. Communications Workers America, the largest union of wireless professionals in the country, recently said the tie-up will eliminate some 28,000 jobs across the U.S. T-Mobile and Sprint acknowledged that some layoffs may end up happening with the goal of creating new synergies, though both remain adamant they will be adding a net positive number of jobs following their consolidation and expect to come good on that promise within a year of combining their operations.

The two smaller national network operators have been discussing a possible tie-up for close to half a decade now, though their merger efforts were off-and-on, having most recently broken down a year ago. The discussions were restarted in early 2018, after which the two sides settled their biggest difference - the one about ownership stakes. Sprint parent SoftBank ultimately agreed to cede a controlling share of the combined company to Deutsche Telekom whose stateside subsidiary plans to absorb Sprint and form "The New T-Mobile." The duo repeatedly claimed they cannot compete with better-funded Verizon and AT&T on the 5G front without joining forces, though those claims attracted some public criticism given how they've vowing to deploy the next generation of connectivity independently for over a year prior to the announcement of their merger attempt. Mr. Carter remained firm while reiterating that sentiment earlier today, asserting the tie-up will allow the two telecom giants to roll out 5G some fifteen times faster with eight times greater capacity.

Impact: While T-Mobile appears to be more than pleased with how the approval process for its bid is currently progressing, a scenario wherein the third- and fourth-largest wireless carriers in the country end up merging in the first three months of 2019 remains unlikely. Lawsuits could still be launched as the DOJ has yet to make the conclusions of its probe official and some industry watchers remain unconvinced that Washington will greenlight the deal with minor demands or no concession requests whatsoever. Both T-Mobile and Sprint are banking on the tie-up to be approved less they risk falling behind in the next-gen wireless race which just started a new episode yesterday after the FCC announced the start of its first high-band 5G spectrum auction.

The likely approval of Sprint and T-Mobile's merger would also complicate things for the current U.S. administration whose stance on big-business consolidations and antitrust in general is becoming less clear by the day. Earlier this year, the DOJ lost an accelerated legal battle with AT&T over its $85.6 billion purchase of Time Warner, arguing that the deal could provide the telecom giant with an unfair advantage in the content business, allowing it to ramp up licensing costs of Time Warner's content for rivals of its own streaming solution - DIRECTV. The move surprised many an analyst, being a largely unprecedented attempt at preventing a vertical merger on Washington's part. While the T-Mobile and Sprint's consolidation would see the number of rivals in the wireless space drop from four to three, AT&T's now-concluded deal didn't take out any competition from the market, yet ended up facing much more significant opposition, at least so far.

The situation is curious enough to have attracted attention from the Democratic party that just won the House of Representatives earlier this month and is planning to open a probe of the matter after its new legislators are sworn in this January, California Rep Adam Schiff said last week. The investigators will be looking into the possibility that the DOJ's lawsuit aimed at preventing AT&T from completing its massive deal was a revenge plot orchestrated by the White House due to the animosity between President Trump and CNN, a division of Time Warner's Turner. AT&T previously tried arguing a similar claim but failed to substantiate it, with both the White House and the DOJ already dismissing those allegations as frivolous. Regardless, if T-Mobile and Sprint manage to complete their merger without major regulatory hurdles, that development would likely give more credence to such claims of biased regulatory activities.

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Dominik Bosnjak

Head Editor
Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]
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