T-Mobile US and Sprint are considering possible concessions to save their proposed merger, as concerns grow that the tie-up will be blocked by US regulators.
Bloomberg, citing sources close to the situation, reported that the companies are considering ways to ease competition concerns around the deal, implying that they are facing possible challenges from the Department of Justice (DoJ) and Federal Communications Commission (FCC) which both need to approve the merger.
The separation and potential sale of the merged entity’s prepaid business is one of the mooted concessions, which could have some sway with authorities. The prepaid market has reportedly caught the attention of US government officials, due to concerns that the merger – which would result in the US market shrinking to three major players – could hurt low-income customers as it would reduce choice and lead to higher prices.
Other options on the table are the sale of spectrum licences and setting up another competitor in the US market through a network leasing arrangement, although both are considered less attractive, said sources.
Bloomberg’s report follows an article by the outlet last month which said that the deal would be blocked in its current structure, claims which were dismissed by both T-Mobile CEO John Legere and Sprint chairman Marcelo Claure.
Both executives then reportedly pitched the deal in face-to-face meetings with government officials, arguing it will not only create a bigger competitor to challenge current market leaders Verizon and AT&T, but also beef up competition with cable companies for broadband services.
However, questions continue to be raised. As well as government concerns, a workers union in the US also issued a statement late last week opposing the deal.
The Communications Workers of America (CWA) District 9 said the T-Mobile, Sprint merger was “not in the public interest and cannot lawfully be approved as structured”
It called on the California Public Utilities Commission to deny the proposed merger as currently structured, as it would eliminate more than 3,000 jobs in California and increase the merged company’s power to unilaterally set wages.
Late last month, the companies pushed back their timeline to close the deal to 29 July 2019. They had previously said they expected the merger to be wrapped up in the first half of the year.Subscribe to our daily newsletter Back