T-Mobile under pressure to sweeten Sprint package to get regulatory nod

Bloomberg

T-Mobile US Inc. suffered a significant setback in its bid for regulatory approval of its takeover of Sprint Corp. after failing to win over the US Justice Department with a remedy package, putting pressure on the companies to offer more concessions.
The wireless carriers could try to sell additional assets to resolve the department’s concerns that the deal would harm competition. The question is whether there’s anything the companies can propose, like selling airwaves or another business unit that will sway the department’s antitrust boss, Makan Delrahim.
“I don’t see how any concessions short of somehow helping to set up a new fourth competitor could make this deal palatable to DOJ,” said Gigi Sohn, an opponent of the merger and a former aide to a Democratic chairman of the Federal Communications Commission.
T-Mobile and Sprint cleared a key hurdle when Federal Communications Commission Chairman Ajit Pai said he would rec- ommend approval of the $26.5 billion merger after the companies offered a package of concessions, including spinning off Sprint’s pre-paid brand, Boost, to win regulators’ blessing.
The Justice Department, however, remains unsatisfied and is concerned the remedies don’t go far enough to resolve concerns that the combination of the No. 3 and No. 4 wireless carriers would hurt competition, according to a person familiar with the matter. Delrahim, the head of Justice’s antitrust division, is leaning against the merger, said the person, who asked not to be named because the review is confidential.
The antitrust division may be worried that the companies’ pro-mises to speed deployment of the next-generation of wireless technology known as 5G doesn’t outweigh harm to consumers from combining two national carriers, said Amanda Wait, an antitrust lawyer at Norton Rose Fulbright in Washington.
“Proving those kinds of consumer benefits is a really uphill battle,” she said. “You can see the DOJ and the FCC going different ways on this because they have different standards of review.”
If the division’s concerns are limited to competition in the market for pre-paid phone plans, where wireless customers pay as they go rather than taking out subscriptions, that problem is fixable, Levin said. But if the Justice Department is concerned about a deal that would leave just three national players, that presents a bigger challenge.