FCC Chair Signals Support for T-Mobile-Sprint Deal

The companies agreed to expand mobile access and to divest the prepaid business Boost.
FCC Chair Signals Support for T-Mobile-Sprint Deal

The Chairman of the Federal Communications Commission, Ajit Pai, announced he has agreed to back wireless carrier T-Mobile’s takeover of Sprint after the companies pledged to expand mobile internet access in rural areas and help the rollout of 5G network technology. Sprint and T-Mobile also agreed to divest prepaid cellphone business Boost Mobile to address antitrust concerns.

The acquisition still needs the approval of the full FCC and the Department of Justice.

A previous attempt at a merger between the companies was dropped in 2014 amid opposition from the Obama administration.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

The deal is valued at $26.5 billion.

“Two of the FCC’s top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the next generation of wireless connectivity,” Pai said in a statement. “The commitments made today by T-Mobile and Sprint would substantially advance each of these critical objectives.”

Pai said the companies have committed to creating a 5G network that would cover 99% of the U.S. population in the next six years. They pledged to cover 85% of the rural U.S. within three years and 90% within six years. The companies guaranteed that 90% of Americans would have access to mobile broadband service at speeds of at least 100 Mbps and 99% would have access to speeds of at least 50 Mbps.

Pai said there would be “serious consequences” including billions in penalties if the commitments were not met.

Opponents of the merger say it could lead to higher prices and fewer jobs.

Sprint shares were up more than 24% in midday trading. T-Mobile shares were up more than 5%.

In its most recent earnings report, Sprint said it had 8.8 million prepaid customers, most of which are likely Boost Mobile users, though the companies does not give precise numbers.

Chief Executive John Legere said T-Mobile will “find a serious, credible, financially capable” buyer for Boost.