T-Mobile and Sprint Plan concessions to wipe out their $ 26.5 billion merger
(Bloomberg) – T-Mobile US Inc. and Sprint Corp. Plans to Announce Commitments to the US Government, including Estate Sales and Rural Service Guarantees, to ensure secure government approval for their $ 26.5 billion merger, according to people with knowledge of the matter.
The promises include the sale of one of its prepaid brands, a three-year development of their 5G network, and a repeated promise not to raise prices while the network is being built, the people said, who asked not to be identified as the case is private . The new promises follow talks with the Federal Communications Commission.
The concessions can be announced as early as this week and should help ease the regulatory approval process for the deal, which has voiced concerns about reduced competition in the wireless industry because the number of big players would fall from four to three. The FCC and the US Department of Justice must both sign in to the transaction. The FCC's 180-day review is scheduled to end in June.
Representatives of T-Mobile and Sprint refused to comment. Brian Hart, a spokesman for the FCC, did not respond immediately to an email and phone call.
Prepaid Sales
Selling part of the prepaid business – where wireless customers pay as they go instead of subscribing – can help calm concerns raised by some state lawyers in general. They fear that a consolidated, three-carrier market will hurt low-income customers by curbing choices and increasing prices. People who are familiar with the case, told Bloomberg News last week that companies considered separation and potential sales of the prepaid business.
Under the plan being discussed, the companies would divert Sprint's Boost brand while holding their Virgin Mobile and T-Mobile's Metro labels. The three together are the largest segment of the American pay-as-go market, with about 42%. These services are popular with people with little or no access to credit.
Peter Adderton, created by Sprint, when merging with Nextel Communications in 2006, has encouraged companies to sell one of the brands to preserve the competition. He said last year that he would like to bid on the brand sold.
Companies have said their home wireless broadband service will better serve agricultural customers. They will deliver 100+ Mbps wireless broadband speeds to 90% of the population and home service to over half of the nation's households by 2024.
T-Mobile's CEO John Legere last month contested a report regulators told companies like the deal , as structured, would be against. Since then, Leger and Sprint chairman Marcelo Claure has visited Washington officials who agree. They argue that the new company could offer competition to home-broadband cable companies, as well as turn Verizon Communications Inc. and AT & T Inc. into developing a nationwide 5G network.
For the T-Mobile owner Deutsche Telekom AG, the takeover will add to the scale of the German carrier's fastest growing unit, giving it more complaint to challenge AT&T and Verizon. Tim Hoettges, CEO of Deutsche Telekom, has argued that T-Mobile will continue to be well-positioned if the agreement is rejected.
Parts in Deutsche Telekom increased 0.6% in early trading in Frankfurt on Monday. Shares in SoftBank Group Corp., which owns Sprint, increased 0.4% from 4:20 p.m. in Tokyo.
(FCC Review Time Updates in Third Paragraph and Owner and Trading in Last 2 Episodes.)
To contact journalists on this story: Nabila Ahmed in New York at nahmed54@bloomberg.net; Liana Baker in New York at lbaker75@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Kevin Miller, James Ludden
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