Opposition to T-Mobile/Sprint Taking Shape
Opposition to T-Mobile buying Sprint is starting to coalesce, with opposition filings having been due at the FCC Monday night in docket 18-197. Communications Workers of America said 28,000 jobs could be lost if the deal goes through. Other groups were lining up for or against. By late afternoon, no one filed a formal petition to deny.
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“Nothing material” has changed since the deal was unveiled that makes it more or less likely to win regulatory approval, aside from DOJ’s appeal of AT&T/Time Warner, a “slight negative,” New Street Research told investors. “Some have suggested that the excellent rollout by the company has increased the odds of success,” New Street said. “We agree with the characterization of the rollout but not on the impact of the odds. The first rule of merger review analysis: a great rollout cannot win the deal but a bad rollout can doom it. … But with the filings, we might have to adjust.”
New Street is watching the strength of the opposition, business support for the 5G case for the deal and conditions proposed that might lead to approval. Opponents are unlikely to propose conditions at this time, the analysts said. “Generally, the opposition wants to push to kill the deal and only offer conditions as a last resort. There are many good reasons for such a strategy, but the biggest one is that one has to paint a picture of the horrors to arise and offering conditions at this time undercuts the clarity of images of problems to come.”
“Contrary to the Applicants’ unsubstantiated claims of merger-related job creation, leading Wall Street analysts predict that massive job cuts from the elimination of duplicative retail stores and headquarters functions at the New T-Mobile will contribute significantly to the billions of dollars in projected merger ‘synergies,’” CWA said. The companies have a “long history of violation of employment law and workers’ rights,” said union said.
Kim Keenan, general counsel at Odyssey Media, highlighted one of the big potential sticking points -- questions about the effect on the prepaid market. “Clearly the Applicants -- who together own Boost, MetroPCS, and Virgin Mobile USA -- are each significant players in that market and together would become even more powerful if the Merger is approved,” Keenan said. “Even without access to commercially sensitive data, it is clear that the effects of the Merger on the prepaid calling services market are likely to be profound.”
Frontier and Windstream Services encouraged the FCC to take a deep dive on spectrum holdings. “Because this high level of spectrum aggregation could have a substantial impact on broadband competition, the Commission should take a hard look at these spectrum holdings and require the companies to divest where there is a competitive concern,” they said.
The deal has the potential to drive up wholesale prices in the wireless market, Phoenix Center Chief Economist George Ford said in a study Monday. “Incentive to raise price in the wholesale market depends on the retail market shares of Sprint and T-Mobile,” Ford said. “My preliminary analysis suggests that the merger will put upward pressure on wholesale prices even after accounting for merger efficiencies.” Free State Foundation countered that the transaction will be good for consumers and not harm competition.