After getting the Justice Department's blessing -- with strings attached -- on their proposed $26 billion megamerger, T-Mobile (TMUS 0.57%) and Sprint (S) officially secured approval from the Federal Communications Commission yesterday. The news comes as little surprise, as three of the five FCC commissioners (Ajit Pai, Brendan Carr, and Mike O'Rielly) had already put out statements in support of the deal, but the two companies are taking another meaningful step toward merging.
Still, they're not in the clear quite yet.
Image source: T-Mobile.
FCC gives the green light
The Verge reports that the agency approved the deal yesterday following a party-line vote. No more than three commissioners on the FCC are allowed to be of the same political party, and two Democratic commissioners (Geoffrey Starks and Jessica Rosenworcel) voted against the merger.
Starks had previously called for the process to be delayed in the wake of allegations that Sprint improperly collected taxpayer-funded subsidies from Lifeline, a federal program designed to help low-income Americans pay for wireless service. Rosenworcel has penned an op-ed in The Atlantic to argue against the deal, The Verge notes.
Rosenworcel points to other industries that have undergone consolidation over the years, including airlines and pharmaceuticals, with a common result being higher prices. "There's no reason to think the mobile-phone industry will be different," the dissenting commissioner wrote. "Shrinking the number of national providers from four to three will hurt consumers, harm competition, and eliminate thousands of jobs."
T-Mobile and Sprint have agreed to help incubate a fourth carrier -- DISH Network (DISH) -- in order to preserve competition, but critics argue that plan is insufficient considering DISH's inexperience in building and operating a cellular network on a national scale. DISH has hoarded wireless spectrum for years and struggled to utilize it.
Rosenworcel continues:
If all goes as planned, Dish Network will have a new, full-fledged wireless system in seven years. But seven years is a long time to wait for a fourth competitor with its own network facilities. In wireless technology, that's a lifetime. And if this jerry-rigged new competitor fails, consumers will be out of luck.
Telecom analyst Walt Piecyk has gone as far as to argue that T-Mobile should renegotiate the deal.
"Sprint's business has been eroding faster than expected and the DOJ conditions for approval were costly." $S $TMUS https://t.co/WlJLPy9Ema
— Walter Piecyk (@WaltLightShed) October 8, 2019
One more to go
The final hurdle that T-Mobile and Sprint need to clear is the multistate lawsuit filed by numerous state attorneys general to block the merger. As more states have joined the legal complaint, others have bailed on it and said the DOJ's settlement and the included concessions satisfy their anticompetitive concerns.
Mississippi Attorney General Jim Hood said last week that he had reached an agreement with T-Mobile to settle his concerns. T-Mobile committed to deploying a 5G network in the Magnolia State within three years of closing the deal, among other commitments. CEO John Legere was "thrilled" by the news.
There are still 17 prosecutors representing 16 states and the District of Columbia that are moving forward with the suit.
