Regulators United in Pouring Cold Water on Potential Sprint/T-Mobile Deal
Federal Communications Commission chairman Tom Wheeler didn’t react as positively Monday to a potential merger between T-Mobile and Sprint as company executives would have liked.
The FCC chairman was “highly skeptical” when Sprint chairman Masayoshi Son and CEO Dan Hesse broached the idea of the potential merger Monday, according to an FCC official. They met with Wheeler and a few senior staffers for more than half an hour. Although the chairman raised concerns, he reportedly said he “would keep an open mind” about a deal, the FCC official said.
SoftBank Corp. acquired control of Sprint last year, and the company is now looking at a potential acquisition of T-Mobile, which would combine the third- and fourth-largest wireless carriers in the U.S.
But the willingness of some senior FCC officials to provide such a relatively negative assessment of Wheeler’s reaction to the possible deal is not a good thing for Sprint officials hoping to get it past regulators.
Former FCC Chairman Julius Genachowski made similar (if a little more circumspect) noises in 2011 after AT&T announced a $39 billion deal to acquire T-Mobile. That deal imploded months later after both the Justice Department and FCC officials objected.
Notably, Wheeler echoed some of the same worries at the meeting that were recently expressed publicly by Justice Department antitrust officials about the potential deal, the FCC said.
Last week, William Baer, the chief of the Justice Department’s antitrust division, pointedly raised concerns about the deal in an interview with the New York Times.
“It’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers,” Baer told the Times, although he didn’t talk specifically about the possible Sprint/T-Mobile deal. “Any proposed transaction would get a very hard look from the antitrust division.”
As Medley Global Advisors telecom analyst Jeffrey Silva said in a research note recently, the administration “has been dropping hints (subtle and otherwise) on its Sprint/T-Mobile thinking” and those hints aren’t promising for the companies.
A Sprint spokesman declined to comment about the FCC meeting on Monday.
Undaunted, Son and Hesse this morning joined President Obama at an event in suburban Maryland to announce a few more details on the White House plan to improve Internet access in schools. Sprint was among seven companies that pledged upward of $750 million in cash, products or services to help kids get online to do their school work.
Sprint offered more than $100 million worth of free wireless service for low-income high school students for the White House plan. Other companies, including Apple, Verizon and Microsoft, are providing similar amounts in services or products for students.