T-Mobile CEO John Legere and Sprint CEO Marcelo Claure are headed to Washington, D.C. this week to try and convince regulators to approve their plans to merge their companies.
They plan to say the combined entity can help efforts to speed 5G deployment in the U.S., amid fears America is falling behind other countries in the race to build the technology. The CEOs are also putting a strong emphasis on jobs, in light of the president’s “America First” focus on U.S. manufacturing and domestic job growth, they told CNBC on Monday. The companies plan to emphasize their plans to invest about $40 billion over three years in their combined network and business – creating jobs through construction of new 5G cell towers, expansion of U.S. call centers and opening new stores.
Legere called the merger “a growth story in which the synergies are more valuable than each company on a standalone basis.” He said President Trump’s tax reform efforts increased the value of the planned merger, said to be valued at about $26 billion. “I think we’re goal aligned from a political agenda,” he told CNBC.
Tower work is key to their plans. Sprint and T-Mobile own complimentary spectrum licenses that may work to their advantage in building a 5G network. T-Mobile has a large portfolio of lower-band spectrum while Sprint has the largest U.S. holding of higher-band, 2.5 GHz spectrum, reports Bloomberg.
The majority of the $40 billion they plan to invest in the first three years will focus on the “110,000 macro sites in this network, right size them to 85,000” while increasing spending elsewhere, said Legere on CNBC. [For more on this angle, see Reader Opinion article from today’s issue.] Plans also call for hanging the T-Mobile 2.5 GHz network from Sprint “on our towers, and ours on theirs, and have an integrated network.”
Legere, who would lead the combined T-Mobile-Sprint entity if regulators approve the deal, said “this magenta T-shirt and these sneakers” are coming to the White House, the DOJ and the FCC in the coming days.
Some Democratic lawmakers question the potential side effects of the union. “This merger by T-Mobile and Sprint raises serious antitrust issues, and is exactly why I urged the FCC and DOJ to investigate a potential merger last year,” stated Sen. Amy Klochubar (D-MN), who’s on the Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights Subcommittee. “I remain concerned that increased consolidation could undermine benefits to consumers.”
Analysts said Monday, the merger faces the most scrutiny from the DOJ about whether the deal would harm competition in the telecom industry; some analysts are giving the proposal only 50-50 odds of passage, reported Bloomberg. “I find it hard, given the history, to see the DOJ not challenge it,” said David Turetsky, a former deputy assistant attorney general with the antitrust division. “It’s basically a four to three in the wireless industry. Even if they argue there are 10 players, they are still the top four.”
May 1, 2018
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