State Utilities Commission Won’t Condone Merger Until April 16 Vote

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The California Public Utilities Commission (CPUC) said Thursday that T-Mobile and Sprint are prohibited from merging until it says so. Although the CPUC put out a proposal to approve the deal earlier this month, they said their decision is not binding until they officially vote on it on April 16. Both companies have California subsidiaries that are public utility telephone corporations under state law, and subject to the jurisdiction of the commission.

The PUC issued the following comment: “Public Utilities Code Section 854(a) states in relevant part that “[n]o person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control … either directly or indirectly, any public utility organized and doing business in this state without first securing authorization to do so from the commission. The merger of the companies’ operations in California is therefore subject to CPUC approval. Accordingly, Joint Applicants shall not begin merger of their California operations until after the CPUC issues a final decision on the pending applications.” 

The carrier had already made plans to go ahead with the merger despite not having the CPUC’s official blessing, according to a letter from T-Mobile CEO Mike Sievert to CPUC Commissioner Clifford Rechtschaffen on March 31. Sievert said it was imperative the deal close on April 1, because of the uncertainty in financial markets related to the coronavirus pandemic. The new CEO said the financing was essential to complete the transaction and necessary for accounting and financial reporting needs. Sievert concluded “the [Public Utilities] Commission lacks jurisdiction over this transaction,” and saw the FCC as the final authority over the deal. 

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