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T Mobile, Sprint face new FCC questions on tie-up

By David Shepardson
FILE PHOTO: A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

By David Shepardson

WASHINGTON (Reuters) - T-Mobile US Inc and Sprint Corp executives this week urged senior U.S. regulators to approve the proposed tie-up, saying the combined company would have the incentive to slash prices, according to a filing on Thursday.

At the meeting Wednesday, Federal Communications Commission officials questioned company executives about such issues as "submitted economic modelling, including how it is conservative in measuring benefits and pricing constraints," according to a filing with the FCC from a lawyer for the companies.

"They also discussed their pricing commitments as well as the incentives for New T-Mobile to aggressively lower prices," the letter said.

The carriers argued that customers with prepaid phone plans "would be among the biggest beneficiaries of the transaction." They suggested that without the merger, T-Mobile and Sprint "will likely have to raise prices" because they "will lack the capacity to keep up with growing demand for wireless data."

Congressional Democrats and consumer activists have objected to the $26 billion merger saying it will raise prices for wireless customers. Kathleen Ham, senior vice president for government affairs at T-Mobile, along with lawyers for both companies, met with FCC Chief of Staff Matthew Berry and other senior officials on Wednesday to answer questions about the deal.

If completed, the tie-up of the third- and fourth-largest U.S. wireless carriers would create a carrier with 127 million customers that would be a formidable competitor to the No. 1 wireless carrier Verizon Communications Inc and No. 2 AT&T Inc.

Last week, T-Mobile chief executive John Legere and Sprint executive chairman Marcelo Claure made the case for the deal to FCC Commissioner Jessica Rosenworcel.

In February, a group of eight Democratic senators and independent Senator Bernie Sanders urged the Justice Department and FCC to reject the deal, saying it could boost monthly bills as much as 10 percent.

Sources told Reuters last week that the Justice Department had concerns about the merger's current structure. Legere met last week with the head of the Justice Department's antitrust division, Makan Delrahim, as the government's review nears a conclusion, Reuters reported. A decision is likely by early June, people briefed on the matter said.

In October, shareholders for both companies approved the deal, struck in April 2018. It has also received national security clearance, but still needs approval from the Justice Department and FCC. A number of state attorneys general are also reviewing it.

To win support, T-Mobile had said it would not increase prices for three years and will offer 5G services at no additional charge.


(Reporting by David Shepardson; Editing by David Gregorio)