With or without California’s approval, T-Mobile looks for quick consummation of Sprint merger

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

Does DISH matter? That’s the question that’ll determine whether the California Public Utilities Commission makes a (relatively) fast decision to allow T-Mobile to acquire Sprint. If it doesn’t, lawyers for T-Mobile and its allies hinted that the deal might move ahead without Californian conditions or, indeed, permission.

Yesterday, CPUC administrative law judge Karl Bemesderfer listened to arguments from lawyers on T-Mobile’s side who pressed for a quick end to the case, and from opponents of the deal who pushed for lengthy, formal litigation. At issue is T-Mobile’s (and Sprint’s, but T-Mobile is running the show) proposal to shift people, spectrum and real estate to DISH, and create a new, fourth competitor in California’s mobile broadband marketplace.

That agreement was reached with anti-trust lawyers working for the federal justice department, after the CPUC’s nearly year-long inquiry was closed. T-Mobile’s ace legal team asked Bemesderfer to “take notice” of the settement, which led him to formally re-open the record and, perhaps, restart a process that could run until sometime next spring.

At the end of the 80 minute “pre-hearing conference” – CPUC-speak for a hearing to decide if there’s going to be a hearing – Bemesderfer cut to the chase…

Both sides have raised, I think, quite compelling points. Joint applicants have made the case that the California-only commitments have not been altered by the post closing-of-the record events in Washington. And I also think joint intervenors have made a case that they have a due process right to test that proposition…

I thank you all for coming and supplying me with your thoughts, and I will go think about this for a while and then I’ll supply you with mine.

Then there’s the vague threat T-Mobile’s lawyer floated about what might happen if the CPUC is the last regulatory agency in the U.S. that doesn’t approve the deal. Suzanne Toller said that it would raise “a number of some very interesting questions about the scope of the commission’s jurisdiction” over T-Mobile, Sprint or any other mobile carrier.

Translation: jam us up and we’ll jam you up in federal court.

Rachelle Chong, a lawyer representing the California Emerging Technology Fund, which flipped from opposing the deal to enthusiastically supporting it after accepting a $35 million payoff honorarium from T-Mobile that it can only cash in if the deal goes through, put it more bluntly. She expressed “very serious concern” about what would happen “if T-Mobile were to pack up its bags and leave California because it can’t get its approvals for this deal”.

Translation: T-Mobile won’t give us the money. Its other California-specific commitments are toast too.

There’s no chance T-Mobile will turn off its network in California, but there’s a real possibility that it can get a federal (or even Californian) judge to say the CPUC is out of bounds. At that point, all promises are off the table.

There’s no particular timeline for Bemesderfer to issue a decision, but a week or two wouldn’t be a crazy guess.

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. I like to think I’m good looking too. Take it for what it’s worth.