Sprint, Nextel Apply For Merger Approval
With few exceptions, the combination of Sprint’s and Nextel’s 2.5 GHz spectrum portfolios wouldn’t increase the amount of spectrum -- licensed or leased -- the combined company would have in a given area above the amount currently available to either company, Sprint told the FCC. In an application for transfer of licenses Mon., the carrier said the companies had focused their spectrum acquisition activities on different geographic areas and there were no overlaps that could cause concerns.
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There are “relatively minor overlaps” in 2.5 GHz band, a Sprint spokesman said. Spectrum overlaps and competition are among the major issues the FCC focuses on when reviewing a merger, but Sprint said neither would become a problem this time. “We expect the FCC to give this a fair and timely review,” the spokesman said: “We do expect that the merger will be approved in the 2nd half of the year.”
“This [merger] is not difficult,” Precursor Group wireless analyst Rudy Baca said: “There will be some overlap in 1.9 GHz, but they will be minor because those bands are very small. Nextel still has a significant spectrum at 800 MHz,” but Sprint doesn’t own spectrum there, so there would be “no overlaps there either.” Baca said he didn’t expect the merger would raise any competition concerns at the Commission because the combined company won’t have dominant market power in any region.
Sprint said in a filing that the majority of Nextel’s BRS/EBS licenses and leases were located in the Northeast, the Central states and the South, while “the vast majority” of Sprint’s BRS/EBS licenses were in the West and Upper Midwest. “In the few basic trading areas [BTAs] in which both Sprint and Nextel hold spectrum, the company with the smaller spectrum position generally has an inconsequential holding,” Sprint said.
Most importantly, Sprint said, the 2.5 GHz interests that the companies hold “often do not cover an entire BTA… After the merger, the combined company generally will not hold appreciably more 2.5 GHz spectrum in any given BTA than either company did prior to the merger.” It said in 408 of the 493 BTAs nationwide, “no more than one or none of the 2 merging companies has any license or leasehold interest in the BTA.” However, Sprint said, by combining their geographically disparate holdings, Sprint Nextel would have access to a 2.5 GHz footprint covering nearly 85% of the population in the top 100 BTAs. Together the carriers have presence in only 85 of the nation’s 493 BTAs.
“On a nationwide basis, a majority of the MHz-pops will remain available for other carriers to use,” Sprint said. For example, it said, in the Canton-New Philadelphia BTA, Sprint covers 38% of the MHz-pops in the BTA and Nextel 1%. “The combined Sprint Nextel spectrum position in a given BTA increases by an average of only 4.3 percentage points on a MHz-pops basis across these 85 BTAs,” it said.
Sprint said the combined spectrum portfolio would provide the company with “the necessary scale to justify the substantial research, development, implementation and operational costs required to make use of the band in a manner that will prove viable over the long term, yet leaves sufficient 2.5 GHz spectrum available for competing operators.” Baca said the FCC “might view” the merger as “a positive development,” given that the combined company would put in use 2.5 GHz, which “hasn’t been really used.”