The odds of T-Mobile getting permission from federal and California regulators to buy Sprint are getting longer. The Wall Street Journal is reporting that the federal justice department is reluctant to approve the deal in its current form. That has a familiar ring to it – it was the same kind of antitrust concerns that led to the justice department and Federal Communications Commission killing Comcast’s bid to take over Time Warner’s cable systems and do market consolidating swaps with Charter in 2015.
T-Mobile seems to be trying to pick up the pieces in California. Its lawyers filed a notice yesterday saying that company representatives will meet with California Public Utilities Commission commissioner Martha Guzman Aceves next week. They didn’t say what they planned to talk about, but it’s not much of a reach to suppose they’ll try to divert attention away from the microeconomic, antitrust harm the deal will do to all Californians, and towards the special benefits that a few have managed to extract for themselves.
Those megabuck spiffs will evaporate if the deal collapses. The CPUC is reviewing it, with a long list of issues to address. A decision is at least two months away, and likely more.
The Journal’s story also kicked off a new round of damage control by the companies and speculation on what a deal that would satisfy anti-trust concerns would look like. A story in Investor’s Business Daily speculated that some kind of hybrid wholesale model, where both companies retail service via a consolidated network, might fly.
The CEOs of T-Mobile and Sprint jumped on Twitter to make what amount to non-denials.
John Legere, T-Mobile’s chief, issued a tightly spun response in which he objected to “the premise of this story, as summarised in the first paragraph”. Translation: the facts reported in paragraph two, three, four and more are true. Marcelo Claure, CEO of Sprint, simply said the article “is not accurate”. As in, I wouldn’t have put it quite that way.
Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.