The United States Federal Communications Commission greenlit the proposed merger of T-Mobile and Sprint following a lengthy review started last year, Chairman Ajit Pai said in a statement published Monday.
While the agency's probe of the deal has yet to be officially closed, the fact that its Chairman confirmed he intends to recommend the tie-in attempt for approval to his colleagues is essentially the same thing; with the Trump administration being in charge of the U.S. government, Mr. Pai represents a 3-to-2 majority at the telecom regulator's top committee, so what he says goes.
While the development comes amid some significant concerns being raised by both antitrust lawyers and consumer rights activists all across the country, the Republican Chairman is of the opinion the agency managed to address those in a sufficient manner. It did so — or attempted to do so, at the very least — by negotiating a trio of concessions with T-Mobile, the buying company in the proposed agreement, i.e. the one that would be absorbing Sprint into its operations. Naturally, Sprint agreed to the very same conditions in principle, but it's not like it will get much say in how T-Mobile will be commanding the ship if and when the proposed tie-up goes through.
Three massive promises… again
As for the contents of the concessions, the most significant one has to do with the next generation of mobile networks, with T-Mobile pledging that the combined company will roll out a 5G network covering 97-percent of the American population within three years of completing the merger. While it alluded to rapid rollouts in the past and argued it cannot accomplish them alone, this is the first occasion whereon T-Mobile actually attached a specific figure to that promise.
The Bellevue, Washington-based telecom giant also promised it won't raise any prices until the new network has been completed. This is a much more superficial promise because T-Mobile and Sprint already made it almost as soon as they announced their intentions to attempt a merger over a year ago. Granted, that promise was not legally binding (at least not directly), yet it was always unlikely the "New T-Mobile" would be going behind on that vow; its aggressive pricing strategy is the whole reason it got into a position of being able to shop around for an expansion outfit and changing it overnight would likely be a recipe for disaster which would erase a lot of goodwill the firm generated over the past half a decade under the leadership of John Legere.
Finally, Sprint's prepaid subsidiary Boost Mobile will be divested if the consolidation goes through, the firms promised. This concession directly addresses the concerns of some of the most vocal critics of the proposed deal, including some rather high-profile names that used to be on the duo's executive roster. The exact details of the agreement are unclear but what's more certain is that Mr. Pai doesn't see any scenario wherein the government should prevent the two from merging, even if they break all of their promises. Instead, the FCC Chairman solely talked about fines potentially reaching up to billions of dollars, which naturally wouldn't be a long-term deterrent to the combined company that's expected to operate with significant profits in spite of Sprint's heavy leverage.
What's left now is for the DOJ's antitrust department to give the final approval of the merger, which is far from guaranteed given the current political climate and in the country, not to mention the legal precedents affecting the case and its ability to survive subsequent antitrust lawsuits.