T-Mobile/Sprint could face House hearings among incoming Democrats

U.S. Capitol at dusk
Democrats in the House may hold hearings on the Sprint/T-Mobile merger. (Pixabay/skeeze)

With Democrats poised to take control of the U.S. House of Representatives, a group of unions, public interest groups and others is urging the legislators likely to head up the House Energy and Commerce and House Judiciary committees to hold hearings on the proposed merger between Sprint and T-Mobile.

And, as noted by Broadcasting & Cable, the requests to Frank Pallone, D-New Jersey, and Jerrold Nadler, D-New York, may pan out considering Pallone in particular called for hearings on the merger in April. Such hearings were not held under Republican House leadership, though top executives from Sprint and T-Mobile did testify on the transaction before the Senate Judiciary Committee’s Antitrust Subcommittee in June.

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The new letter (PDF)—signed by the likes of American Antitrust Institute, Common Cause, Communications Workers of America, Consumer Reports, Public Knowledge and Rural Wireless Association—urges the legislators to “hold a hearing on the likely effects of the proposed transaction.”

“Announcing hearings to examine the single largest pending wireless telecommunications merger, and one of the largest in the nation’s history, would be an excellent first step to implementing your vision for stronger antitrust enforcement, protecting consumers, promoting competition, and standing up for American workers,” the letter states.

The new wrinkle on the pending transaction comes as Wall Street analysts see improving odds for the deal. “We believe the probability of the TMUS/Sprint deal today is better than it was back in 2014 due to a shift in political priorities, industry structure and regulatory thinking on a three-player market,” wrote the analysts at Barclays in a recent note to investors, noting “we believe the likelihood of the deal is better than 50%.”

However, the analysts cautioned that regulators could impose a range of conditions on the transaction, including a mandate that the merged company divest some of the overlapping infrastructure, such as towers and retail outlets, to a new entrant such as Dish Network.

Another possible condition outlined by the analysts is a requirement that the combined company provide an MVNO agreement to any entity that sought such an arrangement. “This solution could be very attractive to cable operators including Comcast and Charter who should in theory get access to much better terms relative to their deal with VZ today,” the analysts noted.

Finally, the Barclays analysts noted that regulators could require a merged Sprint and T-Mobile to divest assets including their prepaid business or their excess spectrum.

And which companies would benefit from the imposition of such conditions? “In our opinion across all the alternatives considered … cable companies would be among the major beneficiaries across most scenarios,” the analysts wrote. “Comcast and Charter would benefit from any MVNO deal terms that allow them more control of the wireless network and devices at a reasonable price. This should in theory be possible if regulators either mandate a new MNO in the market or force TMUS to offer up a full MVNO. In addition, any divestment of subscribers or spectrum could also offer an interesting opportunity for cable operators to accelerate their entry into wireless and drive greater operating leverage.”

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