T-Mobile, Sprint to merge in new test for corporate mega-deals under Trump

- April 29, 2018

T-Mobile and Sprint announced a deal to merge their two companies Sunday, setting up another test of the Trump administration's approach to corporate mega-deals.

The agreement to combine the nation's third-and fourth-largest wireless carriers comes after several false starts over the years, including discussions last year that failed to produce a deal. If approved by federal regulators, the merged company would have about 127 million customers, making it competitive with market leaders Verizon and AT&T.

The deal is structured as an all-stock transaction, and T-Mobile CEO John Legere will stay on as chief executive of the newly formed entity, which will continue to be called T-Mobile.

It's unclear how the deal will fare at Trump's Justice Department and Federal Communications Commission. Under the Obama administration, top officials at both agencies expressed resistance to a merger of the two companies in 2014 due to competition concerns, because it would have eliminated one of the top four U.S. wireless carriers.

The DOJ under Trump's hand-picked antitrust chief, Makan Delrahim, has taken a hard line against another major telecom-media merger, suing to block AT&T's $85 billion deal for Time Warner. Closing arguments in that trial are due to take place Monday. Trump, striking a populist tone, has opposed that deal as concentrating too much power in one company, and his frequent bashing of Time Warner-owned CNN over its coverage has hung over the proceedings.

SoftBank CEO Masayoshi Son, whose company owns Sprint, has actively courted Trump since his election victory, pledging at a December 2016 meeting with the then-president-elect to invest $50 billion in the U.S. and create 50,000 new jobs. Trump took credit for the announcement, saying it never would have happened without his White House victory. SoftBank is based in Japan, while T-Mobile is controlled by Germany's Deutsche Telekom.

Trump-appointed FCC Chairman Ajit Pai has dropped hints that may be open to having less than four major wireless carriers. At an event in Washington last year, he said he doesn't know "in a vacuum, what the optimal market structure of any particular marketplace is — what the right number of competitors should be."

The FCC under Pai also declared the wireless market a competitive one last year, a regulatory designation that some said at the time could signal a new agency openness to industry consolidation.


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