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T-Mobile and Sprint ponder concessions to force through merger

Ofcom's decision has put some noses out of joint

T-Mobile US and Sprint are weighing up the sale of one of the pair’s prepaid brands in an attempt to woo decision makers into greenlighting the divisive merger.

Dating back to April 2018, you will be forgiven for forgetting this saga is still an-going debate in the US. With privacy scandals, the Huawei drama and BT’s dreadful logo stealing all the column inches, the debate over whether T-Mobile US and Sprint should be allowed to merge their operations has been relegated below the fold. But it is still a thing.

The countdown clock, the 180 days the FCC gives itself to approve mergers, spent a lot of time on pause, though the longer the process takes the more likely it appears the answer will be no. If the relevant authorities were looking at the information in front of them, an answer would surely have been given by now, but sceptics might assume the FCC is desperately searching for a reason to say no.

According to Bloomberg, the duo is prepared to make concessions to force through the deal. These concessions include the sale of one prepaid brand, a pledge to finish the rollout of a 5G network in three years and promises not to raise prices during this deployment.

In terms of the timeline, crunch day is fast approaching. The FCC 180-day review is set to come to a close at the end of June, though the deal also has to be signed-off by the Department of Justice. With decision time on the horizon, egos will have to be stroked and arguments set in stone.

The issue at the heart of this debate is focused on competition. Critics of the deal suggest consumers who are at the low-end of the tariffs scale will effectively be punished with higher prices in a market with only three providers. T-Mobile US and Sprint have suggested prices would be kept down in an attempt to compete with AT&T and Verizon, though more than paper-thin promises will be needed.

Selling off one of the prepaid brands would help to preserve competition in this segment, offering more choice for those consumers who do wish to, or cannot afford to, invest in postpaid contracts. It is believed Sprint’s Boost brand is the one facing the chop, with the Virgin Mobile and Metro brands to remain in the potentially merged operations.

Peter Adderton, who sold Boost to Sprint in 2006, has previously stated he would invest in the divested brand. Adderton has been a critic of the T-Mobile/Sprint merger, though if there is a chance to make money entrepreneurs have a way of changing their tune.

Reports have been emerging over the last couple of weeks suggest regulators are still concerned over competition despite assurances made by executives. The Wall Street Journal suggests the deal would not go ahead with the proposed structure of the company, a claim which T-Mobile US CEO John Legere rejects, suggesting there is still some stroking to be done.

Although trying to figure out which way this deal will go is little more than guess work at the moment, there is a feeling it is not going the way T-Mobile and Sprint would want. Rumours are only rumours, but the familiarity of the reports is starting to add weight. It does sound like T-Mobile and Sprint will have to make some considerable concessions to get the greenlight.

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