Sprint, T-Mobile CEOs meet after FCC says it will restart merger review process

Sprint's CEO tweeted a picture of a meeting between Sprint and T-Mobile executives. (Sprint's Michel Combes)

The CEOs of Sprint and T-Mobile held a meeting the day after the FCC said it will restart its informal 180-day merger review process.

“Great meeting today @Sprint HQ with @JohnLegere@SievertMike & the @TMobile/@Sprint leadership teams. Much work to be done & we’re making fantastic progress so we are ready to unleash the power of the merged company once approved,” tweeted Sprint CEO Michel Combes.

Combes’ tweet came roughly 12 hours after the FCC said it will resume its informal 180-day clock on Dec. 4. The FCC paused its so-called shot clock review of the merger in September “following the submission of new economic and engineering modeling by the Applicants.”

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Continued the FCC: “On November 6, 2018, the Applicants filed a new econometric study with the Commission. The new study describes itself as a ‘merger simulation offer[ing] an economically coherent framework, grounded in detailed industry data, for understanding the competitive significance of the proposed merger.’ The analysis represents a substantial body of new material on economic issues central to the review of the proposed transaction. It relies on a newly submitted data set and new methodologies to reach conclusions about the specific effects of the transaction not previously in the record.”

As a result, the FCC said it will seek comments on the companies’ new econometric study; comments are due Dec. 4.

Although the FCC’s announcement indicates that the merger is making progress through the agency, the fact that the FCC is accepting new comments on the companies’ new economic model could represent a slight setback to a merger review that Sprint and T-Mobile likely hoped would sail through government approvals.

Indeed, the FCC is just one of several government organizations that must sign off on the transaction; the Department of Justice is another major government agency that is reviewing it. And just this week, the U.S. assistant attorney general for the agency’s Antitrust Division, Makan Delrahim, spoke with CNBC about the merger.

“A lot of times, these mergers, the parties control the timing—about the number of documents they provide. And in that particular transaction, we also—we’re reviewing it, but also the Federal Communications Commission has a role in that transaction,” Delrahim said. “So our timing will coincide together. I don’t know exactly when it is, but, you know, I announced a number of reforms with the hope that if the parties cooperate with us, we’ll be moving things forward and we hope to get every transaction reviewed within six months.”

Interestingly, Delrahim was also asked about Sprint’s argument that it won’t be able to effectively compete in the nationwide wireless industry without a merger with T-Mobile. “That would certainly be one of the considerations that goes into a number of factors we would review to see, you know, what would happen to the competitive landscape. Does that—what you’re insinuating, does that mean there’s only be then two competitors if this merger doesn’t happen—and one of them would fail or both of them might fail without this merger? Those would be factors we would consider. But I don’t know if the evidence fully supports that,” he said.