The Democratic House of Representatives that was sworn in just last month sent a strong signal to T-Mobile and Sprint this week as it publicly communicated its intention to take a careful look at their proposed merger for however long it deems necessary.
A Wednesday hearing organized by the House Committee on Energy and Commerce gave T-Mobile and Sprint little reason for optimism. The new Democratic chair of the committee, Pennsylvania Representative Mike Doyle, remarked how he can't think of a single merger in the wireless industry that didn't result in jobs cuts, increased prices, and monopolistic behavior being propagated on a large scale.
As it turns out, job creation, competition, and low prices are precisely what T-Mobile and Sprint are pitching with their tie-up attempt, with the duo being at it for nearly a year now. They don't sound any more convincing today than they did last spring but the former House roster controlled by the GOP surprisingly demonstrated little intention to scrutinize the deal and the same held true for the rest of Congress, as well as the Trump administration whose Justice Department even tried dismantling AT&T's purchase of Time Warner, a consolidation that doesn't take out a direct competitor from any segment, unlike what's now being suggested by T-Mobile and Sprint.
The hearing lasted for over three hours and a full recording can be viewed below, courtesy of the House Committee that made it happen. T-Mobile head John Legere and former Sprint CEO Marcelo Claure made no attempts to directly oppose legislators' arguments based on industry precedent but claimed unprecedentedness is exactly what they're going for with the tie-up at hand. Every retail employee working at either carrier will be offered a new job if their position is eliminated as part of the merger, Mr. Claure said during his Washington appearance, without elaborating on the matter.
That's also the only new piece of information the attending executives divulged as part of what was touted as a grilling beforehand, though the very suggestion that the consolidation may not result in any immediate net job loss is still a significant one and not in line with what the two companies have been claiming so far. Instead, both T-Mobile and Sprint were previously focused on medium- and long-term net job growth, saying that some cuts are inevitable.
Most of the Democrats at the committee suggested they will continue scrutinizing the deal and few were satisfied with the answers provided by the two executives, especially their claims about 5G competition increasing as a direct result of the tie-up. Low-income customers are at a particularly high risk of being negatively affected by the consolidation as the prepaid segment will see its largest two players merge, leaving them with less incentive to maintain their competitive services, several representatives remarked during the hearing.
Possibly the best angle T-Mobile and Sprint can push among Democrats pertains to the latter's poor financial situation and the fact that many analysts are describing it as overleveraged due to its $33 billion debt. Combining its operations with T-Mobile would move that debt into a much more sustainable sphere, whereas a bankruptcy would spell horrible news for Sprint customers, as explained by Rep. Anna Eshoo (D-CA) during the hearing.