T-Mobile and Sprint are finally set to complete their $26-billion merger but the move could ultimately be held up by the California Public Utilities Commission (CPUC). The commission, reports indicate, has not approved the application for the merger within the state. Without approval, the commission asserts that the merger would be in direct violation of Public Utilities Code Section 854(a).
Specifically, that code states that corporations can’t merge any public utility in California without permission from the commission. In effect, that means that T-Mobile and Sprint are free to start joint operations elsewhere but not within the state. The rule primarily applies here because both carriers have subsidiaries in California that are public utilities under the state’s laws.
T-Mobile and Sprint have already met most conditions set by the CPUC
Now, the approval of the merger by the CPUC has essentially already been ignored by the two service providers.
In late March, T-Mobile CEO Mike Sievert reportedly sent a letter to CPUC Commissioner Clifford Rechtschaffen indicating the merger would continue without CPUC approval. Mr. Sievert asserts that the deal is necessary to secure financial stability for the company. The executive also went a step further to assert his belief that the CPUC “lacks jurisdiction” over the merger deal. That jurisdictive power, he explained, falls squarely on the FCC.
That disagreement could ultimately lead to extended disputes in court at the federal level. That’s despite previous proposals put forward by the CPUC. Those contained conditional requirements that have effectively already been met by the carrier in agreements made directly with the state of California.
For instance, the proposed conditions included provisions regarding the newly merged company delivering 5G to consumers. More directly, it indicated that T-Mobile would need to provide speeds of at least 100Mbps to at least 85-percent of the state’s rural population by the end of 2026. Speeds of at least 50Mbps would need to be available to 94-percent of that populace in that same timeframe.
More pertinently, the prior proposal in early March required the new company to create at least 1,000 new jobs in California. That’s the same figure required by the deal made at the state level. The proposal contained a few extra requirements regarding back-up power for consumers. That was meant to address potential power outages or other emergencies.
When will this finally be brought to a close?
CPUC is presently scheduled to vote on the pending merger approval on April 16. Given the number of additional concessions made by the joint company, it seems unlikely that the deal won’t be approved.
Aside from already effectively meeting conditions set forth by CPUC, T-Mobile and Sprint have agreed to offer a 2GB plan at just $15 per month and a 5GB plan at just $25 per month as part of the merger. Those plans, like the other California concessions, will remain in place for at least five years. Additionally, the newly merged company will need to offer 100GB of high-speed internet and free mobile hotspot devices to underserved Californians as part of the deal.