A key federal regulator says he plans to approve wireless carrier T-Mobile’s $26.5 billion takeover of rival Sprint, a crucial step for the deal’s approval.
Federal Communications Commission Chairman Ajit Pai said Monday he agreed to back the deal because the two companies had promised the government steps that would expand mobile Internet access in rural areas and help the rollout of 5G, the next generation of mobile networks.
While Pai’s backing is key to the deal, further steps remain. The full commission must still vote, and the Justice Department must also clear it.
Pai said Monday that the combination will help bring faster mobile broadband to rural Americans. He said the companies have committed to deploying a 5G network that would cover 99% of Americans within six years. 5G promises faster speeds and could support new technologies. The companies also said they would divest a prepaid cellphone business, Boost Mobile, to address antitrust concerns.
Paj’s statement:
“Two of the FCC’s top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the next generation of wireless connectivity. The commitments made today by T-Mobile and Sprint would substantially advance each of these critical objectives.
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“For example, the companies have committed to deploying a 5G network that would cover 97% of our nation’s population within three years of the closing of the merger and 99% of Americans within six years. This 5G network would also reach deep into rural areas, with 85% of rural Americans covered within three years and 90% covered within six years. Additionally, T-Mobile and Sprint have guaranteed that 90% of Americans would have access to mobile broadband service at speeds of at least 100 Mbps and 99% would have access to speeds of at least 50 Mbps.
“The construction of this network and the delivery of such high-speed wireless services to the vast majority of Americans would substantially benefit consumers and our country as a whole.
“I’m also pleased that the companies have committed to a robust buildout of their mid-band spectrum holdings. Demonstrating that 5G will indeed benefit rural Americans, T-Mobile and Sprint have promised that their network would cover at least two-thirds of our nation’s rural population with high-speed, mid-band 5G, which could improve the economy and quality of life in many small towns across the country.
“Moreover, the companies have offered specific commitments regarding the rollout of an in-home broadband product, including to rural households. This would give many Americans another option for home broadband service.
“The companies have also taken steps to respond to concerns that have been raised about this transaction. Most importantly, in addition to their prior commitment not to raise prices for three years, T-Mobile and Sprint have decided to divest Boost Mobile. This sale is designed to address potential competitive issues that have been identified in the prepaid wireless segment.
“It’s also important that the companies would suffer serious consequences if they fail to follow through on their commitments to the FCC. These consequences, which could include total payments to the U.S. Treasury of billions of dollars, create a powerful incentive for the companies to meet their commitments on time.
“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it. This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”
Companies’ stocks jump
Pai said T-Mobile US Inc. and Sprint Corp. would suffer “serious consequences” if they don’t meet their FCC commitments, including the possibility of having to pay billions to the Treasury Department.
Sprint and T-Mobile argue that the combination will lead to better 5G service, and have made promises before on not raising prices, creating U.S. jobs and building a home-internet business to compete with cable companies as well as Verizon and AT&T.
Public-interest and labor groups as well as Democratic lawmakers have raised concerns about industry consolidation leading to wireless price increases and job cuts.
The Obama administration rebuffed the companies’ earlier effort to merge, as well as an attempted deal between AT&T and T-Mobile, on concerns that such deals would hurt competition in the wireless industry.
Shares of T-Mobile jumped 6% in morning trading, while Sprint’s stock soared 24%.
