FCC’S $26B CALL
Clears T-Mobile, Sprint tie
T-Mobile’s controversial deal to buy rival Sprint won’t be getting any more static from the Federal Communications Commission.
FCC Chairman Ajit Pai (inset) threw his weight behind the $26 billion megamerger on Monday, saying the deal could bolster the rollout of highspeed 5G wireless networks across the US.
Pai’s surprise endorsement — which came on conditions that included T-Mobile selling its prepaid mobile service Boost — sent Sprint shares soaring 19 percent, to $7.34. T-Mobile shares rose 3.9 percent, to $78.29.
Pai’s support caught Wall Street off guard, as media reports in recent weeks indicated that the DOJ would not approve the merger as structured. T-Mobile Chief Executive John Legere — known for his pink track suits and chronic Twitter habit — had previously insisted Sprint wouldn’t sell Boost to get the deal cleared.
Crucially, the merger also would shrink the number of US wireless carriers from four to three — a number that antitrust regulators have previously said was too few. Verizon and AT&T are the No. 1 and No. 2 US telecom giants, respectively.
Pai said the deal, which would extend coverage to more rural parts of the country, would not affect phone bill prices for the next three years.
Critics, however, blasted the suggestion that phone bills wouldn’t be increased.
“It is hard to imagine ultimately that prices for consumers are not going to rise,” said Pivotal Research analyst Jeffrey Wlodarczak. “Wireless prices across Europe are already materially below the US and this transaction is not going to change that.”
Despite Pai’s blessing, a Sprint/T-Mobile deal isn’t imminent. Formal FCC approval could take weeks, with Democratic commissioners expected vote against the deal in a 3-2 split. The DOJ must also approve the deal, and it isn’t clear it will be satisfied with Sprint’s concession to sell Boost.
According to Guggenheim analyst Mike McCormack, the DOJ could require “something else to happen” such as the emergence of cable giants Comcast and Charter Communications as wireless competitors.
Wlodarczak, the Pivotal analyst, noted that a Sprint/T-Mobile tie-up also wouldn’t bode well for Dish Network as it looks to find a partner to build out its wireless spectrum. Dish, whose shares fell as much as 11 percent Monday before closing down 5.9 percent, at $33.24, said Monday that it is buying broadcast satellite service Echo-Star in a stock deal valued at more than $800 million.