Pai Affirms T-Mobile-Sprint Merger; Cites 5G Value

Deal still faces scrutiny in 16 States; no FCC timetable set
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Ajit Pai

Federal Communications Commission chair Ajit Pai today distributed a draft Order to approve the proposed $26.5 billion merger between T-Mobile and Sprint. Pai had signaled his support of the alliance after the Department of Justice endorsed the plan in late July. He first indicated support for the merger in May.

There is no target date for an FCC vote on the merger approval. Meanwhile, attorneys general in 16 states have voiced opposition to the merger, which would create the third-largest U.S. wireless carrier. Analysts expect that legal challenges at the state level may take until at least October to resolve.

Related: FCC: Dish Has Incentive, Ability to be Wireless Competitor

FCC commissioner Jessica Rosenworcel promptly tweeted, "I believe we need more competition, not less. I am not convinced that removing a competitor will lead to better outcomes for consumers." Her comments augur a likely partisan split when the FCC eventually votes on the merger.

Pai called the merger a transaction that "will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas." He also lauded the deal for promoting "robust competition in mobile broadband, put critical mid-band spectrum to use and bring new competition to the fixed broadband market.”

Pai said the merger survived "one of the most exhaustive merger reviews in Commission history."

The draft order reviews concerns raised about the competitive effects of the transaction, which would make Deutsche Telekom AG (T-Mobile's parent company) the single largest shareholder and controlling partner in the new company. The plan calls for several conditions, such as the divestiture of Boost Mobile, to address the potential for competitive harm.

The draft contends that the transaction would increase competition and network quality in many respects. But it says that the Boost Mobile divestiture is necessary to ensure that price-sensitive customers in densely-populated areas are not harmed.

The initial draft analyzes the proposed merger in light of DISH’s planned acquisition of Boost Mobile, including extensions, commitments and modifications to DISH’s spectrum holdings to support its deployment of a nationwide 5G network. The Order finds that DISH’s planned 5G deployment, in connection with its acquisition of Boost, would also be in the public interest.

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