T-Mobile and Sprint plan concessions to get US$26.5bil merger cleared

  • Business
  • Tuesday, 21 May 2019

FILE PHOTO: A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

NEW YORK: T-Mobile US Inc and Sprint Corp are planning to announce commitments to the US government including asset sales and rural-service guarantees to help secure regulatory approval for their US$26.5bil merger, according to sources.

The promises include the sale of one of their prepaid brands, a three-year buildout of their 5G network, and a reiterated pledge not to raise prices while the network is being constructed, said the sources. The new pledges follow talks with the Federal Communications Commission (FCC).

The concessions could be announced as early as this week and should help ease the regulatory approval process for the deal, which has stoked concerns of reduced competition in the wireless industry because the number of major players would fall from four to three. The FCC and the US Department of Justice both have to sign off on the transaction. The FCC’s 180-day review is scheduled to end in June.

Representatives for T-Mobile and Sprint declined to comment. Brian Hart, an FCC spokesman, didn’t immediately reply to an email and telephone call.

Selling off part of the prepaid business – where wireless customers pay as they go rather than taking out subscriptions – might help soothe concerns raised by some state attorneys general. They fear that a consolidated, three-carrier market would harm low-income customers by curbing choices and raising prices. Sources told Bloomberg News last week that the companies were considering the separation and potential sale of the prepaid business.

Under the plan being discussed, the companies would hive off Sprint’s Boost brand while keeping their Virgin Mobile and T-Mobile’s Metro labels. The three together make up the largest segment of the US pay-as-you-go market, with about 42% share. These services are popular among people with little or no access to credit.

A Boost Mobile founder, Peter Adderton, whose business was acquired by Sprint when it merged with Nextel Communications in 2006, has urged regulators to have the companies sell one of the brands to preserve competition. He said last year he would like to bid for the divested brand.

The companies have said their wireless in-home broadband service will better serve rural customers. They will deliver 100+ Mbps speeds for wireless broadband to 90% of the population and in-home service to over half the country’s households by 2024. — Bloomberg

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