The battle lines are being drawn in T-Mobile/Sprint merger

Washington DC National Capitol Building
Regulators and legislators in Washington are evaluating the proposed merger between T-Mobile and Sprint. (Getty/lucky-photographer)

The brewing fight over T-Mobile’s proposed merger with Sprint is getting clearer, with sides forming in support of—and in opposition to—the transaction. Specifically, T-Mobile appears to be rallying former regulators and legislators to its side, while some congressional Democrats and some public interest groups are formulating their arguments against the deal.

Sitting in the middle are the FCC and Department of Justice, which must sign off on the transaction. It’s unclear how those agencies might act on the deal: Although most observers see the Trump administration as favorable to big businesses, the DoJ filed a lawsuit against AT&T’s attempts to purchase Time Warner. Meantime, the FCC has allowed AT&T’s recent purchase of FiberTower and Verizon’s purchase of Straight Path, but in 2014 it moved against a Sprint and T-Mobile merger.

It’s clear that Sprint and T-Mobile are doing whatever they can to rally support for the transaction. Indeed, Sprint’s Marcelo Claure announced last week he will step away from his role as CEO of Sprint in part to spend more time in Washington to push for approval of the deal.

“This is going to be a long journey, but overall, I would say that we are—I'm happy in the fact that we have been received with an open mind and they have said, both agencies or the first people that we met in the agencies, they both said that they're going to analyze our case with open mind,” Claure said last week of his initial meetings with Washington lawmakers and regulators, according to a Seeking Alpha transcript of Sprint’s earnings call with investors. “There's no preconceived notions, and like both John [Legere, T-Mobile’s CEO] and myself have said, we feel extremely positive.”

Meantime, T-Mobile appears to have added the likes of John Sununu and Robert McDowell to its roster of supporters. Sununu (a former U.S. Senator) and McDowell (a former FCC commissioner) both recently wrote columns in support of the deal—Sununu in Morning Consult and McDowell in Forbes—and both are listed as either consultants or advisors to T-Mobile.

On the opposite side of the transaction are groups like Public Knowledge. “If approved, this deal would especially hurt consumers seeking lower-cost wireless plans, as the combined company’s plans would likely increase while competitors AT&T and Verizon would have even less incentive to lower prices,” noted Phillip Berenbroick, senior policy counsel at Public Knowledge, in a statement from the group. “Unless the merging parties can demonstrate clear competitive benefits we have yet to see, we will urge the Department of Justice and the FCC to reject this deal.”

And, as reported by The Hill, Sen. Amy Klobuchar and a handful of other Democratic senators inked a letter to the FCC and DoJ arguing against the merger of Sprint and T-Mobile. “As more than three-quarters of American adults now own smartphones, including many who depend on these devices for their primary connection to the internet, an anticompetitive acquisition in the wireless market could result in higher prices for American consumers or force some people to forego their internet connection altogether,” they wrote in the letter.

At the very least, some analysts are expecting regulators to require the companies to divest some of their holdings: "While they would like to keep it all, given the vast amount of spectrum they have at the 2.5 Gigahertz range, that could be problematic," Fitch Ratings analyst Bill Densmore said, according to TheStreet.

After years of on-and-off negotiations, T-Mobile and Sprint reached a merger agreement late last month in a transaction the companies hope to complete by early next year.