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(Bloomberg) – T-Mobile US Inc. and Sprint Corp. plan to announce commitments to the US government, including asset transfer guarantees and rural service, to secure the regulatory approval of their merger, amounting to 26.5 billion dollars, according to subject informants.
The promises include the sale of one of their prepaid brands, the development of their 5G network after three years, and a repeated pledge not to raise prices during the construction of the network, said the people who asked not be identified as such. is private. The new promises follow discussions with the Federal Communications Commission.
The concessions could be announced as early as this week and should help ease the process of regulatory approval of the transaction, which has fueled the concerns of reducing competition in the wireless sector, as major players would go from four to three. Both the FCC and the US Department of Justice must approve the transaction. The 180-day review of the FCC is expected to be completed in June.
T-Mobile and Sprint representatives declined to comment. Brian Hart, a spokesperson for FCC, did not immediately respond to an email or phone call.
Prepaid Sale
Divesting some of the prepaid business – where wireless customers are paying as they go rather than buying subscriptions – could help ease the concerns raised by some state attorneys. They fear that a consolidated three-carrier market will hurt low-income customers by limiting choices and raising prices. People familiar with the problem told Bloomberg News last week that the companies were considering the separation and potential sale of the prepaid company.
As part of the plan being discussed, companies would sell Sprint's Boost brand while retaining their Metro tags from Virgin Mobile and T-Mobile. The three together represent the largest segment of the US distribution market, with a share of about 42%. These services are popular among people with little or no access to credit.
Peter Adderton, founder of Boost Mobile, whose business was acquired by Sprint when it merged with Nextel Communications in 2006, urged regulators to ensure that companies sell one of the brands in order to maintain competition. He said last year that he wanted to bid for the brand ceded.
Businesses said their home wireless broadband service would better serve rural customers. They will provide speeds greater than 100 Mbps for wireless broadband to 90% of the population and home-based services to more than half of the country's households by 2024.
Last month, T-Mobile chief executive John Legere disputed a report that the regulators would have informed companies that the deal, in its structure, would be opposed. Since then, Legere and Sprint's president, Marcelo Claure, have been visiting officials in Washington to present the deal. They argue that the new company could compete with cable companies with home broadband, and beat Verizon Communications Inc. and AT & T Inc. by developing a national 5G network.
For the owner of T-Mobile, Deutsche Telekom AG, the takeover would add importance to the fastest growing unit of the German operator, giving it more weight to challenge AT & T and Verizon. Tim Hoettges, CEO of Deutsche Telekom, said T-Mobile would still be well placed if the deal was rejected.
Deutsche Telekom shares rose 0.6% Monday in Frankfurt. Shares of SoftBank Group Corp., owner of Sprint, rose 0.4% at 4:20 pm in Tokyo.
(Updates with FCC's review schedule in the third paragraph and company ownership and negotiation in the last two paragraphs.)
To contact the reporters on this story: Nabila Ahmed in New York at [email protected], Liana Baker in New York at [email protected], Scott Moritz in New York at [email protected]
To contact the editors in charge of this story: Elizabeth Fournier at [email protected], Kevin Miller, James Ludden
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