T-Mobile, Sprint Merger Gets FCC Chair’s Blessing While DOJ May Say No

Hours after the FCC backed the merger based on several ‘significant’ concessions the two made to ensure widespread available of 5G technology, especially in rural areas, Bloomberg reported the DOJ may be pushing against it.

It’s uncertain if the proposed merger between telecom giants T-Mobile and Sprint will ultimately be approved but two federal agencies aren’t helping to make it any more clear whether the deal will prevail.

Ajit Pai, chairman of the Federal Communications Commission, on Monday released a statement in which he said he will recommend the $26.5 billion merger, which in April 2018 was first officially unveiled after years of back-and-forth negotiations between the two and two failed previous merger attempts. His recommendation comes after the two agreed to multiple concessions.

In light of the significant commitments made by @TMobile 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. My full statement: https://t.co/GPQFoPnSC8

— Ajit Pai (@AjitPaiFCC) May 20, 2019

However, Bloomberg on Monday reported that the U.S. Department of Justice is leaning against the merger because it feels the concessions were not enough to allay anti-trust concerns.

[Related: It's Official: Sprint, T-Mobile Merge In Bid To Challenge Wireless Leaders AT&T, Verizon]

T-Mobile, Sprint, and the DOJ did not respond to a CRN request for further information.

Pai in his Monday statement said that T-Mobile and Sprint made significant concessions as a way to meet two of the FCC's priorities: closing the digital divide in rural America and advancing the nation's 5G technology leadership.

Those concessions include committing to deploying a 5G network to cover 97 percent of the U.S. population within three years and 99 percent within six years after the merger is closed, ensuring that such a network would cover 85 percent of rural Americans within three years and 90 percent within six years, and guaranteeing that 90 percent of Americans would have access to mobile broadband service with at least 100 Mbps and 99 percent with access to at least 50 Mbps. The two also agreed to divest Boost Mobile to address competitive issues on top of their previously-stated commitment to not raise prices for three years, Pai said. The two also face the prospect of paying billions of dollars in fines if they do not meet their commitments, he said.

"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," Pai wrote in the statement.

However, Bloomberg reported Monday that the Department of Justice seems to be leaning away from the proposed merger despite the FCC chairman's backing.

Bloomberg, citing an unnamed source familiar with the DOJ’s review of the merger, reported Monday that the DOJ feels there is still too much possibility for harming competition despite the concessions reported by the FCC.

According to Bloomberg, the FCC looks at mergers from the point of view of whether they are in the public interest, while the DOJ looks at whether a merger might hurt competition and raise prices for consumers. As such, the two have rarely if ever reached different conclusions on a merger.