The much-discussed T-Mobile and Sprint merger took another step closer to becoming a reality when a federal government committee and other top U.S. regulators approved the proposed union, the New York Times reports.
A group that included the Committee of Foreign Investment in the United States, the Department of Justice, the Department of Homeland Security and the Department of Defense all agreed to the $26.5 billion deal, T-Mobile announced in a company release.
“We are pleased to achieve both of these important milestones in the journey to build the New T-Mobile,” T-Mobile Chief Executive Officer Johen Legere said in a statement. “We are a step closer to offering customers a supercharged disruptor that will create jobs from day one and deliver a real alternative to fixed broadband while delivering the first broad and deep nationwide 5G network for the United States. These approvals assure the strong partnership both companies have with the U.S. government will continue with the New T-Mobile. We look forward to continuing our discussions with the remaining regulatory agencies reviewing our transaction to share our story and subsequently achieve similar positive results.”
Not everyone views the merger as a positive, however. According to the New York Times, some investors, consumer advocates and government officials are opposed to the merger because they believe a new, large telecom company would limit customer choices and result in higher price points.
On the other side, people in favor of the deal feel the combined company would provide competition with AT&T and Verizon in the wireless technology industry in the United States. Legere argued he’d, “lower prices to attract new customers.”
The recent approval the carriers’ received is just a step towards making the merger official, however. The Federal Communications Commission (FCC) would still need to approve it. That might stall things, as the FCC has been critical of this merger in past. In 2014, FCC regulators opposed a proposed merger on the grounds that decreasing the U.S.’s wireless market to three major carriers would not be good for customers.
The deal still faces additional regulatory approvals, but if the carriers get them, the deal is expected to be finalized during the first half of 2019, T-Mobile says.
The T-Mobile/Sprint merger is not the only deal in the telecom industry that’s faced regulatory resistance. AT&T’s $39 billion bid to purchase T-Mobile in 2011 was turned down because it was believed more competitors were better for consumers as a larger field results in better service and lower prices, according to regulators.
National security is another issue holding up the deal. Some lawmakers are skeptical of Huawei, the Chinese telecom gear maker that’s involved with the deal. American officials have deemed the company a national security threat and U.S. companies like Sprint and T-Mobile have avoided using Huawei’s company to run on its networks, according to the New York Times.
However, Huawei is involved with the proposed merger because both carriers’ parent companies are Huawei customers. Japan’s SoftBank controls Sprint, while German company Deutsche Telekom controls T-Mobile.
Huawei’s relationship with the carriers could be changing, however. As the approval looms, Deutsche Telekom is revisiting its purchasing strategy due to the controversy surrounding Huawei. Meanwhile, in Japan, government officials have stated they are creating measures for procurement in the information technology and communications network arenas with a special focus on cybersecurity. Officials have denied any guidelines developed would single out companies like Huawei.
“This doesn’t mean to exclude particular companies,” Yoshihide Suga, Japan’s chief cabinet secretary said. “It’s extremely important not to procure equipment that are embedded with malicious functions.”
SoftBank spokesman Takatoshi Mori said reports the company was reconsidering its relationship with Huawei were speculative. However, he also stated SoftBank would consider its policies in the future while abiding by the government’s policy. Mori stated it’s European vendors that supply SoftBank with most of its equipment.