T-Mobile Chief Predicts Federal OK of Sprint Deal by End of June
T-Mobile CEO John Legere still expects the FCC and DOJ to approve the company’s buy of Sprint by the end of June. The FCC’s unofficial 180-day shot clock expires June 4, he said Thursday. “We remain optimistic and confident,” Legere said on a Q1 call. The company reported it spent $93 million advocating for the deal in the quarter.
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“We continue to work through the regulatory review process and believe that we’re in the final innings of a process that we have a great deal of respect for,” Legere said. “We continue to have a productive dialogue with both federal and state regulatory authorities.” He noted 16 of 19 state regulatory agencies that have reviewed the deal have approved it.
Legere said T-Mobile will offer the nation’s “first real” 5G network using its 600 MHz spectrum, as soon as handsets are available later this year. If the Sprint buy is approved, “we will get access to unmatched mid-band spectrum for 5G,” he said. “Having 5G on 600 MHz in terms of coverage and adding Sprint spectrum for broad capacity will be a true game changer.”
“I can’t wait to create the new T-Mobile and truly take it to the entrenched players in wireless and beyond,” Legere said. “Opponents of this transaction are desperate to maintain the status quo.”
T-Mobile said its deployment in the 600 MHz spectrum it bought in the TV incentive auction has reached almost 3,500 cities and towns and the equipment it’s using is “5G ready.” The carrier said it’s “on track to have the first nationwide 5G network available next year.”
The company again led the U.S. in the quarter on net adds. It reported 1.7 million total net additions in Q1, up 15 percent from the same quarter last year, and 656,000 branded postpaid phone net adds. Revenue was $11.1 billion, up 6 percent, with profit up 35 percent to $908 million. Postpaid phone churn was 0.88 percent.
Meanwhile, T-Mobile and Sprint reported Thursday on a meeting with aides to FCC Chairman Ajit Pai to argue for their deal. Kathleen Ham, T-Mobile senior vice president-government affairs, and others from the companies met with FCC Chief of Staff Matthew Berry, Senior Counsel Nicholas Degani and David Lawrence, head of the T-Mobile/Sprint Transaction Task Force.
The executives “described the affirmative case for the transaction that has been submitted by the Applicants and responded to questions from the FCC participants,” they said in docket 18-197. They answered questions on “their submitted economic modeling, including how it is conservative in measuring benefits and pricing constraints” and “discussed their pricing commitment as well as the incentives for New T-Mobile to aggressively lower prices.”
The Wireless Bureau said the Nevada Office of Attorney General now has access to confidential numbering resource utilization and forecast reports filed by wireless carriers and disaggregated, carrier-specific local number portability data as it investigates the transaction. At least 15 other states sought similar access as part of state investigations, the public notice said.
Phoenix Center Chief Economist George Ford said the cards were always stacked against approval. “In 2011, the DOJ presumed the AT&T and T‑Mobile deal was ‘likely to enhance market power’ because the deal’s impact on the Hirschman-Herfindahl Index, a measure of market concentration, far exceeded the 200-point presumptive threshold,” Ford wrote for Bloomberg: “The Sprint-TMO transaction increases the HHI by 400 points. A floundering Sprint offered cautious optimism, but the DOJ appears unmoved by such concerns.” T-Mobile’s promise not to raise prices for three years likely hasn’t helped, Ford said. “Enforcing such a promise in an industry with complex pricing involving multiple goods and services presents significant challenges,” he said: “Such enforcement may not be a good deal for consumers, perhaps blocking a price change that consumers prefer (e.g., reducing up-front equipment costs but raising service prices).” T-Mobile didn't comment.
On the quarterly call, Chief Technology Officer Neville Ray said T-Mobile’s 5G product will differ from what its competitors are offering. “It seems to be a handful of sites in very urban environments with very limited range,” he said. T-Mobile will deploy high-band spectrum for fifth generation wireless, eventually, Ray said. “The software is not mature.” High band can be helpful here but only in the densest of urban areas since the signal disappears 500-600 feet from a small cell, he said. Without Sprint, T-Mobile faces a “dilemma” in that mid-band spectrum is otherwise unavailable, with no auctions scheduled, Ray said.