T-Mobile And Sprint Merger Deal Gets Scrutiny

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Last April T-mobile announced its plan to buy Sprint for $26 billion. At that time, the T-Mobile and Sprint merger seemed likely to get regulatory approval. Right now the company is still expecting the deal to close before this year is over.

 

T-Mobile And Sprint Merger

 

T-Mobile And Sprint Merger:

 

Last year when T-Mobile had announced its intention to buy Sprint. All the prospects for the billion dollar deal being approved appeared strong.

 

Even though a similar deal was blocked a few years ago, nevertheless, the Trump administration officials voiced less concern.

 

However, the merger has faced quite a bit of harsh scrutiny within the past few weeks. The Democratic lawmakers have been very outspoken about their disapproval of the deal.

 

The Democrats, as well as consumer advocates, claim that combining T-Mobile and Sprint will result in higher prices and job cuts.

 

Combining America’s third and fourth largest wireless providers with more than 100 million active subscribers as the 5G technology is being rolled out. If/when this merger happens it would reshape the entire wireless industry.

 

Lawmakers have also expressed their concerns about the companies’ lobbying blitz over the past year, focusing on lots of executives staying at the Trump International Hotel in Washington.

 

There are some lawmakers who have suggested that the companies were trying to buy favoritism with the Trump administration.

 

These concerns expressed by the lawmakers will take center stage at both congressional hearings later this week. Marcelo Claure, Sprint’s executive chairman, and John Legere, T-Mobile’s chief executive officer are expected to face some tough questions.

 

The hearings before the House Committee on Energy and Commerce and then the House Committee on the Judiciary will have no influence on the government’s regulatory review.

 

Approval for the merger comes from the Federal Communications Commission, and the Justice Department, and they are almost finished with their own independent investigations of the deal.

 

President Trump himself appointed the leaders of these agencies.

 

Last week during a call with investors, Mr. Legere said that he believed everything will work out fine with the deal, and it should be completed by June.

 

However, a congressional hearing that occurs this late in the review process may add pressure on the agencies. Or reveal new information which prolongs the investigations.

 

In an attempt to alleviate the concerns by the regulators and lawmakers, last week the companies promised that they would not raise their prices for at least three years after the merger has been completed.

 

After the companies made that statement it made people question whether the merger was in trouble. Late last week Craig Moffett, an analyst at MoffettNathanson, an investment research firm, stated “It can’t be seen as good news for the deal’s prospects,”

 

The biggest concern by many of the Democrats is the potential harm to the consumers as a result of the merger according to Jeenah Moon from The New York Times.

 

During the Obama administration regulators insisted that the nation must have four big nationwide wireless carriers to keep the wireless services affordable.

 

The competition among the four companies will force carriers to deploy better and faster services to the consumers.

 

Regulators would often refer to T-Mobile’s deals for consumers as proof that the competition was beneficial to the top two wireless carriers, Verizon and AT&T.

 

“We need to understand how the merging of two of the four largest wireless carriers will affect consumer prices, American workers and competition,” says Representative Frank Pallone Jr. of New Jersey who is the Democratic chairman of the Energy and Commerce Committee.

 

“We also want to make sure that the F.C.C. puts consumers first as it reviews whether this merger is in the public interest.” Says President Trump’s regulators and Republican lawmakers.

 

It’s no secret that the president has made the advancement of the 5G wireless technology a national priority. He has stated that China’s lead on 5G is a national security threat.

 

The president made that statement because 5G technology will be used to power advanced robotics and technologies such as driverless cars.

 

Sprint and T-Mobile have stated that their merger will provide a way for America to advance 5G technology, especially to rural areas that do not have access to cable services.

 

The companies claim that if they combine their resources they will have the ability to invest more heavily and quickly in the newest wireless technologies and bring them to the market faster.

 

Mr. Legere has made several visits to the Justice Department and the F.C.C. within the past year and he has documented many of his visits on social media platforms.

 

Roughly one month after the merger was announced, Mr. Caure of Sprint co-hosted a fund-raiser for Representative Marsha Blackburn, a prominent Republican lawmaker from Tennessee running for the Senate.

 

She has been a long time supporter who has supported a number of issues favorable for the telecommunications industry.

 

Ms. Blackburn won her election in November, shortly thereafter T-Mobile hired Mignon Clayburn, a former Democratic F.C.C. commissioner as an adviser.

 

Ms. Clayburn is known as a fierce advocate for low-income communities, and she has been outspoken about her disapproval of the lack of competition in the wireless industry.

 

Democratic lawmakers have been focusing on the number of bookings which occurred at the Trump International Hotel by the company executives during the regulatory review.

 

The Trump Hotel stays may not affect the decision by federal regulators on the merger deal, according to analysts.

 

However, Blair Levin, a senior analyst at New Street Research, claims that the amount of attention focused on the hotel stays may lead to more scrutiny in the future.

 

Mr. Levin said, “If the story grows, by virtue of direct evidence that T-Mobile’s motive was to influence the president and/or evidence the White House encouraged such behavior, it may increase the motive of Democratic attorneys general to bring an action against the deal.”

 

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