T-Mobile-Sprint May Need to Create a Competitor to Get Merger Deal Approved


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Top officials at the Justice Department want T-Mobile and Sprint to create a new carrier as a condition to clearing their merger, reports Bloomberg.

The carriers have been discussing potential additional conditions that could clear the transaction with the DOJ, according to sources with knowledge of the talks. The biggest concern surrounding the deal is that a merger would reduce the number of large U.S. carriers from four to three, reducing competition. 

T-Mobile and Sprint argue their combination would make a stronger number three carrier than if they continue to be separate. So far, Justice Department antitrust chief Makan Delrahim hasn’t yet been persuaded by that position and still wants four carriers, according to a source cited by Bloomberg.

A package of concessions endorsed by the FCC failed to persuade the DOJ’s division to approve the transaction. Still, discussions have been productive and the Justice Department hasn’t reached a final decision, one of the sources told Bloomberg.

T-Mobile CEO John Legere and Sprint Executive Chairman Marcelo Claure met with top antitrust officials last week. They were seen outside the Justice Department’s headquarters in Washington on Wednesday. The carriers and the DOJ declined comment.

T-Mobile and Sprint need to determine whether the remedies offered to gain approval are too onerous. Setting up a fourth competitor is possible, but could be unappealing to the carriers, said Blair Levin, an analyst with New Street Research and a former FCC chief of staff. He suggested a new competitor could also emerge from the cable industry.

The talks with the Justice Department are taking place after FCC Chairman Ajit Pai last week said he’d recommend his agency approve the merger on the condition that the companies sell Sprint’s “Boost” prepaid brand and build an advanced 5G network over three years. They must also pledge not to raise prices while the network is being constructed.

May 31, 2019

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