A new report out of The New York Post on Friday, states that the Justice Department may in fact, approve of the T-Mobile/Sprint merger.
This of course, comes just days after the Justice Department was reportedly against the merger, and was looking to file a lawsuit to block the merger. That was, until FCC Chairman Ajit pai talked to the Justice Departments Antitrust head, Makan Delrahim. Who will be responsible for either approving or blocking this merger.
Earlier this week, the FCC had reportedly approved of the deal for T-Mobile and Sprint to merge. Shortly thereafter, the DOJ had reportedly said it would not approve of this merger. Pai “consulted” with Delrahim, before endorsing the merger earlier this week. But after talking with Pai some more, Delrahim may actually go against the DOJ staff, and approve of this merger.
As with most telecommunications mergers, both the FCC and DOJ need to approve of this merger. As a surprise to no one, this merger has seen plenty of government pushback, since it was announced over a year ago. This is because it would cut the number of nationwide wireless carriers from four to three. T-Mobile and Sprint have been pushing out revised merger plans, including some big plans for 5G and selling off Boost Mobile once the merger is finalized.
For the DOJ, the main concerns are with antitrust. But both T-Mobile and Sprint have been arguing this deal is necessary if the US wants to be first (or one of the first) with a 5G network. While AT&T and Verizon are building out their network now, T-Mobile and Sprint have no way of competing with them right away, if they do not merge.
In Pai’s letter endorsing the merger earlier this week, the 5G argument was one of the key reasons why he was endorsing this merger.
Seeing the DOJ flip so quickly on whether or not to approve this merger might seem pretty surprising, and even signal something shady. Which could be true, but it’s a good thing for T-Mobile and Sprint. But remember, the report earlier this week was about the DOJ staff wanting to block the merger, not Delrahim specifically. As it stands today, the DOJ staff still wants to block the merger, while Delrahim wants to approve it. That is if this report is correct.
Sprint really needs this merger. If it does not merge with T-Mobile, it will likely go out of business in five years or less. With its assets going to the highest bidder (most likely AT&T or Verizon, making the duopoly even stronger). This is something that Sprint actually outlined in a letter to the FCC a few weeks ago.
If this merger is approved, we’ll be losing a fourth carrier, but gaining a strong third carrier that can actually compete with AT&T and Verizon. And that right there is T-Mobile’s main selling point with this merger. As it stands now, AT&T and Verizon are more than twice the size of T-Mobile, resulting in a huge gap in the wireless space.