Sprint, T-Mobile merger still faces legal appeal despite FCC's formal approval

7 Nov 2019

The Federal Communications Commission (FCC) formally approved the acquisition of Sprint by T-Mobile US this week, following a vote by commissioners last month. The FCC voted 3-2 to approve the deal, with the commissioners voting along party lines. Republican commissioners Brendan Carr and Michael O’Rielly backed Chairman Ajit Pai’s proposal to allow the merger, while Democrats Jessica Rosenworcel and Geoffrey Starks voted against it. The watchdog has now rubber-stamped the approval, issuing a Memorandum Opinion and Order, Declaratory Ruling and Order of Proposed Modification.

Outlining its position, the FCC says that the transaction will help close the digital divide and advance US leadership in 5G. Specifically, T-Mobile and Sprint have committed within three years to deploy 5G service to cover 97% of the American people, and within six years to reach 99% of all Americans. This commitment includes deploying 5G service to cover 85% of rural Americans within three years and 90% of rural Americans within six years.

In connection with the merger, the FCC has also proposed – subject to conditions – modifications to construction deadlines related to DISH Network’s proposed market entrance. (Note: in July 2019 the two parties won over the Department of Justice [DoJ] by agreeing to divest Sprint’s pre-paid businesses and 800MHz spectrum assets to satellite TV operator DISH Network for a total of USD5 billion. DISH initially promised to build a 5G network that will comprise 15,000 cell sites and cover 70% of the US population by June 2023.)

Going forward, the two companies still face a lawsuit brought by a group of state attorneys general, headed by New York. The lawsuit – against Sprint and its parent company, Softbank Group Corp, and T-Mobile and its parent, Deutsche Telekom – argues the deal will lead to higher prices for consumers. A trial date has been set for 9 December.