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T-Mobile and Sprint Still Have to Convince the FCC and DOJ

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Over the weekend, T-Mobile and Sprint came to an agreement with each other. After years of negotiations, the two companies decided to merge operations to become a powerful third carrier instead of doing things separately.

But even though the two companies have reached an agreement, there is still the issue of being allowed by federal regulators from the Department of Justice and the FCC to merge. Ever since merger talks began, these two government agencies have been pushing against the possibility. Not to mention, they have even successfully sued to block the transactions of other telecom companies (AT&T-Time Warner).

With Sprint and T-Mobile hoping to complete the deal by the middle of 2019, they still have to wait on the approval of these two agencies. As of this writing, it's still too early to determine whether the regulators will vote to approve the deal. And to make matters worse-- the two agencies have not made any comment since the agreement was done.

Executives from Sprint and T-Mobile, however, remain hopeful of getting a favorable decision from the regulators. They believe that they will get an approval since the merger will be good for jobs and will be good for America. This is because they believe the merger will help make sure that "America and American companies lead in the 5G era." The same argument was made by US President Donald Trump when he decided to block the Broadcom's proposed Qualcomm purchase. The executives believe that the New T-Mobile will create thousands of new jobs for Americans and will hire more people together.

Although these points seem valid and likely to sway the decision of the two government agencies, most analysts are not too keen about this.

"We believe there is less than a 40% chance the deal will be approved by regulators, as it is currently positioned. There is clearly much higher uncertainty with the current administration which could end up being a benefit to deal approval. However, uncertainty is not typically favorable for how investors discount the probability of a transaction closing." - Walter Piecyk, BTIG
"The message from our regulatory contacts was simple-- 'this won't be easy.' While we believe the messaging itself is quite compelling-- job creation, infrastructure investment to keep up with China, the wireless industry moving beyond 4 players, etc. But the numbers become harder when looked at purely from a market concentration standpoint." - Wells Fargo
"Seven years ago may seem like a lifetime on Wall Street. But it is a blink of an eye in Washington." - MoffettNathanson  
But not all analysts believe T-Mobile and Sprint are fighting a losing battle.

"Based on our conversations, the FCC at least seems open to evaluating the deal on its merits, though the DOJ could be an obstacle. The outcome of the pending T-TWX (TWX, Hold) ruling could influence the DOJs appetite to oppose a deal, though deal dynamics are very different." - Jefferies
"We see an 80% approval probability, but with conditions. Wireline/wireless/video markets are converging, which we expect the DOJ to consider, but with structural remedies that essentially enables a fourth competitor" - Oppenheimer

But why do T-Mobile and Sprint have to merge?

Separately, the two companies place number 3 and number 4 (respectively) in the wireless market. Even though T-Mobile has earned subscribers through its "Uncarrier" marketing campaign, it mostly stole Sprint's market share instead of its two bigger rivals. Sprint, on the other hand, is deeply buried in debt and is no longer able to earn a consistent profit.
 

And with AT&T and Verizon all set to roll out 5G networks in the next couple of years, T-Mobile and Sprint would only be in deeper trouble; especially since they were among the last to implement 4G. In order to continue to grow and to survive, these two companies need to merge.

This, unfortunately, may not be reason enough to win the vote of the antitrust regulators. When industries go down from four to three players, the customers can expect the prices to almost always go up. T-Mobile CEO John Legere and Sprint CEO Marcelo Claure assured the public, however, that the deal won't be harmful to consumers since T-Mobile has been known to offer low-cost plans.

In addition to this, the two companies are expecting to save up to $6 billion a year by merging together. This is all thanks to the efficiencies they will gain by combining infrastructure. One plan they have is to cut down on maintenance costs by shutting down 35,000 redundant cell sites. For the consumer, this means that prices will be lowered.

Once the deal is finalized, the companies say they will be hiring 80,000 full-time employees in the country. T-Mobile also promises they will launch a nationwide 5G buildout, which will be incredibly expensive for the company to handle alone.

But before Sprint and T-Mobile start planning out things, they have to present a compelling case. They need to convince the regulators that this is the right move not only for the two companies, but for consumers and for the country.



Source: Fierce Wireless, CNN

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54 comments:

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  1. I hope the FCC blocks this deal. Neither company needs the others spectrum. If the deal is blocked, there is still a roaming agreement.

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  2. We need more innovation in our country, jobs creation, more investment and more competitive wireless plans. This merger will bring all that. No other wireless company has the spectrum that these two combine will. I hope the FCC and the DOJ sees all these benefits for our country, consumers and our lead in 5g innovation.

    ReplyDelete
    Replies
    1. Then all the carriers should merge, so we can have 6G, more innovation and jobs now, our toasters need Internet connection too, cats too, fast connection... cats are like very fast.

      Who wants to see MetroPCS and Boost fighting over customers! No more fighting, give peace a chance.

      Delete
    2. I agree with the OP. The carriers are promising that they won’t raise prices and that they’ll be just as aggressive competing against AT&T and Verizon as they are today. Sprint CEO Marcelo Claure says that the merger will lower their network costs, so they’ll be able to offer even cheaper service. Detractors just worry.

      A lot has changed in 4 years since the earlier deal failed. Now the gov says that US leading in 5G networks is critical to national security. The deal will really speed deployment (even by competitors). It will create, not eliminate net jobs.
      20M Sprint customers already have a phone that is compatible with the Tmo network, so they can benefit even if the deal is killed. Tmo will give Sprint a 4-year roaming agreement as a parting gift. Other Sprint customers will have to get another phone. Tmo was very good to MetroPCS customers in their transition, giving them new phones.

      I vote yes!

      Delete
    3. Anon 11:56 hit the nail on the head.

      If these companies need to merge to go beyond 4G, then we as a country are not ready for 5G. I would rather have affordable 4G than overpriced 5G.

      Lets not put these companies' wants over our needs.

      Delete
    4. Why do these companies need to merge to build a 5G network? Why can't they exist as competitors but co-build like Bell and Telus do in Canada?

      Delete
    5. Sharing a 5G network should be "Plan B" if the merger is not approved.

      Hard to agree on network sharing, though; Sprint does not want to give up most control over the network to T-Mobile. Cooperating and competing at the same time is hard to do successfully. There is much more incentive to share in Canada due to the low population density/higher net costs per user. But Bell and Telus are still criticized by competitors and some regulators as being too cozy to be true competitors. And if that is true, they and consumers would get even more savings and benefits from a merger. Like the Tmo-Sprint deal.

      Delete
    6. "I would rather have affordable 4G than overpriced 5G.
      Lets not put these companies' wants over our needs."

      The USA needs to be a leader in 5G. It's a national security issue now. $Trillions of economic impact if we fall behind. Your needs pale in comparison. But don't worry. You will get more for less with 5G. Especially if the merger goes through; you will get it all faster.

      Delete
    7. "National security issue."

      That's it, folks. This thread has officially jumped the shark.

      Delete
    8. Anon 10:12, I will only get higher prices with this merger.

      My local tower does not have a fiber connection and is running at maximum capacity with 4G. Even if 5G NR is deployed out here, it will bring only minimal speed increases that are not worth the loss of competition cost of this merger.

      If the USA wanted to be a leader in 5G, its government should have required the duopoly to start pulling more fiber ten years ago. This merger cannot forestall these infrastructure deficiencies.

      Delete
    9. "My local tower does not have a fiber connection and is running at maximum capacity with 4G."
      Fiber is not the only tech used for backhaul. Both Tmo and Sprint are deploying massive MIMO from Nokia and Ericsson that will have 64 antennas, vs 4 to 8 now. They are also deploying more spectrum and many more small cells to fill capacity gaps. If you have no fiber backhaul, they are probably using spectrum for that, or maybe renting capacity from the cable company. In more dense areas they will use millimeter wave spectrum.

      Delete
    10. "This thread has officially jumped the shark"
      No, you're just uninformed.

      The merger is necessary for the United States to regain 5G leadership from China. The companies are right that if the United States loses 5G leadership, millions of jobs are at risk and even more will not be created. Consequences of losing generational leadership are so stark that entire industry sectors in the affected countries disappear. Economic security is necessary for national security. To help the USA regain global 5G leadership, the new T-Mobile promised to invest $40 billion over the next three years into their network. This represents about a 30% increase compared to the capex rate that Sprint and T-Mobile had announced previously.
      5G will create millions of jobs. The question is who can take credit for it, and whether regulators give T-Mobile credit for them. It is critical for T-Mobile and Sprint to get credit in the gov review for creating these jobs in the overall 5G economy. If not, the merger will probably fail. And the Chinese will keep their lead.

      Delete
  3. I think Boost mobile dealers are panicking while Metro dealers are licking their chops...

    ReplyDelete
  4. It ain't over till it's over.

    But my guess is it'll get done. ("Horrors NOOoooo!!!!")

    ReplyDelete
  5. "Putting the Un-carrier Strategy into Overdrive!
    Team,
    I’ve got some incredible news to share, and I wanted to be the first one to reach out and make it official! Today marks a huge step forward for ALL of us as we prepare to take the Un-carrier revolution to a whole new level!
    We just announced that T-Mobile and Sprint have reached a definitive agreement to come together and form a new, bigger, stronger company! Yep. You read that right, we are merging with Sprint. If you want to know how excited Mike and I are about this — check out our video here…
    This combination sets us up to SUPERCHARGE the Un-carrier and to quickly deliver the only Nationwide 5G network with BOTH the breadth and depth needed to offer the kind of capacity and performance that American consumers want and need in the 5G era!
    We’ll still be called T-Mobile, we’ll still be magenta, I’ll still be your leader, and we’ll continue to be customer obsessed! I’m also excited to share that Mike Sievert will be the President and COO of the New T-Mobile, and we are making plans to innovate and drive this business forward just like we always have.
    Trust me when I say that this is the deal we have been waiting for, and this is the combination that will take everything to a new level!
    We think that ONLY the New T-Mobile can quickly deliver a NATIONWIDE 5G NETWORK with the capacity and scale to truly accelerate innovation and increase competition in the U.S., and we plan to make that a reality! Leading early in nationwide 5G will result in leadership for the country in the digital economy, and it will drive a giant wave of U.S. innovation and disruption that we believe will benefit customers with lower prices, better service and innovative applications.
    New T-Mobile will absolutely SUPERCHARGE the pro consumer Un-carrier strategy! As a larger, stronger, better-scaled competitor we’ll strive to deliver an incredible set of services to consumers and businesses at lower prices than ever before. We’ll drive broader, better competition in the rapidly converging content and communications marketplace, including traditional wireless, in-home broadband, entertainment & beyond. And, we’ll bring REAL wireless choices and mobile broadband competition to Americans in rural areas for the first time.
    The New T-Mobile will CREATE JOBS and be a driver of investment and the U.S. economy! We expect to create thousands of jobs — well beyond what the two companies could do by themselves — by bringing T-Mobile’s world-class customer care to Sprint customers, by hiring employees to merge networks and build out our 5G network and systems and by investing in new businesses.
    But let me say this… it is YOUR hard work and efforts over the past 5 years that has put our company in the position to make this deal happen — so THANK YOU! T-Mobile is going to be even BIGGER & BETTER than you ever imagined!
    This will take time.
    As is typical of any merger, this deal has to go through all the standard regulatory review processes which will take a while. We are optimistic this will clear regulators but nothing is ever guaranteed, so as excited as you all are — please continue to focus on doing exactly what you have been doing for the past 5 years… Listen to our customers and do what they tell you. It is the success that you have all delivered that has gotten us this far — so don’t stop now!
    We’ll keep you updated on the process and timelines as we go. And you can check out T-Nation to get the latest information and resources anytime. We’ve also launched a site externally for people who want to learn more about the deal here.
    Today’s news is about taking this fight — on behalf of consumers — to the next level and beyond! The next wave of mobile is too important not to fight for and now we are positioned to accelerate that fight for consumers everywhere!
    Verizon, AT&T, Comcast and the others better watch out because…We. Are. Coming.
    And…We. Won’t. Stop."

    ReplyDelete
  6. Size matters. In this context, we have a duopoly. VZ/ATT will frequently remind us that they have the biggest network, so more signal in more places. For many customers this is a primary consideration, and they pay for it. Tmobile or Sprint cannot compete in the size department. Even after the merge, they are still the smallest of the three companies. After the merge, they will have more sprectum, they should not be forced to give up any of it, this is temperary. Cell companies always want more spectrum. The mmWave auction is in November, Tmobile or Sprint cannot out bid VZ or ATT.
    Post merge Tmobile will have access to 850mhz and more 1900mhz, so less roaming on ATT.

    ReplyDelete
  7. Population of the US: 325 Million

    145 Million - Verizon
    134 Million - At&t
    71 Million - Tmobile
    53 Million - Sprint
    5 Million - US Cellular
    1 Million - Shentel
    -------------------
    414 Million - Total

    The US market is saturated. Merger is the best way forward for Tmobile and Sprint.

    ReplyDelete
    Replies
    1. Future growth will be in IoT, fixed mobile broadband etc.

      Delete
    2. They counted me 9 times. 8 are free or no monthly cost.
      I'll be most readers have more than one active line.

      Delete
  8. Roaming indefinitly on a competitors network is a sick, twisted, impractical idea.

    ReplyDelete
    Replies
    1. Well, it enabled T-Mobile's tremendous growth, so they would not agree with you.
      Let's go back 5 years in the time machine to learn how:
      https://www.engadget.com/2011/12/20/t-mobile-usa-and-atandts-seven-year-umts-roaming-agreement-gets-d/

      Delete
  9. T-Mobile has to pay Sprint $600M if they pull out of the deal, per SEC filing.
    If the merger falls through for any reason, Sprint gets a 4-year roaming agreement.

    ReplyDelete
  10. I just like to know how much faster do when need speeds for internet. Yes I like faster speeds but when enough is enough. Enough to even notice. I can see going from Cricket (8mbps) to At&t Prepaid and get faster speeds for downloading files but isn't 100 to 200mbps fast enough!

    ReplyDelete
    Replies
    1. Rural Broadband. 51% of Americans have only one high-speed broadband option – no choice at all. New Tmobile will create a viable 5G alternative for millions by enabling mobile connections that rival broadband, driving prices lower and improving service.
      Business and government wireless services. Today, Verizon and AT&T dominate this category with 4x more customers than Sprint and T-Mobile added together. With its assets and capabilities, the new Ymo will provide real competition for business and government customers.

      Delete
  11. If T-Mobile and Sprint need to merge to build a better network, why don't we merge the US to build a better country? Merging with Canada seems obvious but why not get really ambitious and merge with Europe and Japan maybe Australia?

    ReplyDelete
    Replies
    1. We tried a government regulated, virtual-monopoly telephone network some years back.
      It was not good.

      Delete
    2. Because no other white/asian country will have us, and every other one will drag us down.

      Except maybe Russia, which can never get enough imperialism.

      Delete
    3. You're selling us short. I bet Britain would take us and with enough handshakes and hugs the French would welcome us too.

      Delete
  12. I see a lot of sheeple parroting off the PC talking points.

    The fact is, if Tmo and Sprint don't merge, then Verizon and AT&T will be able to out-invest them slowly and without real competitive pressure.

    In the long run, we could wind up seeing both Sprint and Tmo going put of business or being gobbled up by AT&T and Verizon if the investment gap grows too large to overcome.

    Sprint is already at that point, but 5G could also spell the death of Tmo if it doesn't have adequate resources to build out its next generation network.

    The point is, the price of fanatical contrarianism is a genuine duopoly ruled by Big Purple, where prices will skyrocket at consumers' expense.

    As of now, the only reason for opposing the merger is outright ignorance or ulterior motives (i.e. being a Sprint MVNO/dealer).

    ReplyDelete
    Replies
    1. Tmo has the least spectrum. They bid against Verizon and AT&T for Straight Path, which owned huge amounts of millimeter wave spectrum, and lost. They will bid on high band that the FCC will auction, but have asked them to auction several bands at once, instead of one at a time. They are desperate. They will have to buy in the 3.5 MHz mid-band auction, and try to win all across the country. This will make the $6B 600 MHz purchase look small, if they can actually win enough bids.
      Time is running out. There are only 18 months until the mid-term elections, which could affect the legislative and regulatory climate.
      The longer the gov approval drags out, the lower the benefits of the merger ($6B/year; $46B present value). While they wait for a decision, both companies will have to deploy towers and spectrum, buy more spectrum, and much of that will be wasted, especially by Sprint.

      Delete
    2. Please provide us with examples where mergers have lead to lower prices for the consumers.

      Delete
    3. Since you asked nicely, here are two:
      T-Mobile and MetroPCS
      AT&T and Cricket

      Bonus: T-Mobile and Voicestream

      Delete
    4. Thank you, Anon757. Now please provide data as to how the mergers you mentioned caused lower prices. Something like "a plan with x minutes, y texts and z data used to cost __, now it costs __."

      Delete
    5. I could tell you, but I 'd have to bill you.

      Delete
  13. Does anyone remember when T-Mobile was trying to sell itself off, including to AT&T and Sprint?
    I'm curious what would have happened to the combined company if Sprint had bought T-Mobile a few years ago.

    ReplyDelete
    Replies
    1. Everything Sprint touches turns to crap.

      They've got the touch.

      The sadim touch.

      You ever notice how the word "touch" looks weird when you type it repeatedly?

      Yeah, me neither.

      Delete
  14. Feeling left behind in the 5G discussion? Watch this short IEEE video that explains the new tech with easy-to-understand analogies.

    https://spectrum.ieee.org/video/telecom/wireless/everything-you-need-to-know-about-5g

    ReplyDelete
  15. I use Virgin mobile and I think 5G is a gimmick that is unnecessary. It is just an overblown ploy to try and justify customers having to pay more. Look how all these big phone companies bought out the prepaid companies, used lobbyist to tax topup cards, and now they want to merge. Don't allow the merger!

    ReplyDelete
    Replies
    1. Virgin works OK now. But you wouldn't like it if data use continues at its current rate of increase and the network slows to a crawl. Like being in permanent rush hour.

      Carriers can't buy enough of the limited low and mid-band spectrum remaining to solve this problem for you using LTE. So unless you plan to die soon, you're going to have to switch to 5G within the next few years, whether you like it or not. Don't worry; prices will stay the same or go down, given the massive increase in network capacity.

      Delete
    2. "I think 5G is a gimmick that is unnecessary. It is just an overblown ploy to try and justify customers having to pay more. "
      My 33-year-old relative said the same thing to me. I asked him how he would feel when he could no longer watch streaming news on the commuter train twice a day, or stream movies while mobile on trips. He would not like this.
      At the current rate of mobile data usage growth, the networks will approach capacity and slow to a crawl, just like the AT&T network buckled when millions of new iPhones were added. People could not make calls or were cut off during heavy congestion.
      That is your future without 5G unless more LTE capacity is added at even greater expense. Plus, there is not enough low and mid-band spectrum left to sell in the bands currently available to keep up with the growth using LTE. Many more towers and small cells would have to be added. New radios and antennas would have to be purchased to add capacity and speeds even without 5G tech.
      Without 5G, prices would have to increase if you want to use lots of mobile data in a spectrum-restricted world. You would not like that.

      Delete
  16. Right now, the only unlimited plan with 20GB of hotspot is on Sprint/Boost. T-Mobile doesn't even come close. And AT&T and Verizon won't bother to compete on that level. If Sprint had merged with T-Mobile sooner, that plan would never have existed. That's the kind of competition we'll all lose after the merger.

    ReplyDelete
    Replies
    1. That is correct. Hotspot is the most important plan feature for many of us and I doubt we would be seeing it offered on unlimited plans without competition from Sprint.

      Delete
    2. It's human nature to have doubts and fears about the unknown. Just ask yourself this:

      You're the new big carrier on the block. You just built the first fast nationwide 5G mobile network, and you want a ROI ASAP. You're looking for ways to steal millions of customers from the former duopoly. Your network has 100 times the capacity of your former LTE network.

      Would cancelling free hotspot on your plans help you or hurt you in doing that?

      Be skeptical, but NO FEAR.

      PS: Legere says the Uncannier moves will continue after a merger.

      Delete
    3. "If Sprint had merged with T-Mobile sooner, that plan would never have existed."

      Yes, we all know that Sprint's existence is the source of all innovation, new investment and low prices we have enjoyed over the past 25 years. Without Sprint we would all still be using 2G GSM flips and candy bars. Mobile data would crawl at 64kbps. Apple would just be making beige Macs. We would still navigate the natural way, with paper maps. And we would still be able to find payphones in rural areas! I really miss those phone booths.
      Maybe the Government should buy Sprint and preserve it as a monument to competition. Then taxpayers (the rich 53% of American adults) could subsidize the plans and phones so they would be almost free! Slackers rejoice!

      Delete
  17. Rural areas have few choices. Vzw or/and Att. Tmobile may work in this town, but not the next. Same for Sprint. One could get an account with Tmobile and another with Sprint. Or Tmobile and Sprint could merge.

    ReplyDelete
    Replies
    1. +1. Pay Google to sell your personal life for more money than they make off you today. Get US Cellular thrown in as your rebate.

      Delete
    2. Like Apple doesn't if you use an iPhone? Or Alphabet doesn't if you use any G service on iPhone regardless of MNO?

      Like Alphabet doesn't when using android phone regardless of MNO?

      Ever read the EULAs / permissions? You are providing your personal life regardless of Fi or not. Alphabet may be more effective at making a $ from it than competitors but other than that, no difference.

      Delete
    3. Google will sell your info whether you pay them or not. Paying them more won't make you feel better.
      Apple makes money by selling you things, not your personal information. They collect to serve YOU, not advertisers. They retain FAR less info, and don't rely on selling it as their business model. Huge difference - do your homework.

      Delete
    4. I've done my homework. No difference other than Apple fleeces the drone sheeple for more $ than Alphabet. Apple serves their shareholders.

      You are self diluded if your "homework" leads you to believe otherwise. Enjoy your happy selfdiluded little world.

      Delete
    5. Your homework grade is 'E" if you really think there are no differences.
      Study this website and 'Think Different.'

      https://www.apple.com/privacy/

      Delete
    6. Drink the koolaid, go ahead its harmless and will take you away to a better place.

      Delete
  18. Update on Tmo-Sprint merger talks, and network integration, migration plan. E.G., one FCC commissioner said during discussions about how the merged company will compete with Verizon and AT&T: "Rather than kick these guys in the shins you can now punch them in the face."

    https://www.fiercewireless.com/wireless/t-mobile-hopes-for-sprint-merger-approval-as-soon-as-next-month

    ReplyDelete
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