DoJ rumoured to be half-convinced by T-Mobile/Sprint 5G argument

The anti-trust chief in the Department of Justice is said to be receptive to T-Mobile and Sprint’s argument that the combined company will improve America’s competitiveness in 5G.

Fox Business reporter Charlie Gasparino claimed people close to Makan Delrahim, Assistant Attorney General for the DoJ’s Antitrust Division, have disclosed that the department is receptive to the argument that a third strong operator in the US will help the country compete better with China.

Gasparino first tweeted about his “Scoop sources” before he went on the screen:

As we reported earlier, the proposed merger still needs to overcome two barriers before it can be completed: the DoJ and the FCC. Gasparino explained that, unlike the FCC which needs a panel decision, the DoJ’s decision rests on Delrahim’s office alone. It looks that the argument for 5G competitiveness from the merger is outweighing his concerns for anti-trust consequences. Also significantly, Gasparino said, the FCC tends to follow the DoJ’s decision in cases like this.

5G has always been a central argument in the merger case. In its public interest statement published in June 2018, the companies stressed the investment commitment and the benefits the New T-Mobile would bring to America. $40 billion in the development of a nationwide 5G network and services will be made by 2024. “The New T-Mobile network will have approximately double the total capacity and triple the total 5G capacity of T-Mobile and Sprint combined, with 5G speeds four to six times what they could achieve on their own,” the companies said in the close to 700-page document.

The argument of competing with China on 5G with a third strong operator comes days after the companies claimed the merger would benefit up to 50 million Americans who currently do not have access to broadband, when T-Mobile launched its LTE FWA trial.

Meanwhile, the position of FCC is not getting clearer. On 7 March, for the third time, the agency put a hold on its 180-day countdown to gather feedback while ploughing through new information, which, FCC detailed, is related to the extension of a simulation model for the merger provided by the companies. The Commission will re-open the countdown at day 122 on 4 April.

The market was encouraged by the news. Both companies’ share prices grew following Gasparino’s tweet. T-Mobile closed the day up by 1.42%, and Sprint’s up by 1.75%.

New York revokes approval for Charter’s Time Warner acquisition, two years on

The New York State Public Service Commission decided to revoke its approval for Charter Communications’ $55 billion acquisition of Time Warner Cable in 2016, claiming the former’s failure to live up to its promises.

When it came in to snatch Time Warner Cable from Comcast’s failed acquisition bid, Charter Communications was creating the country’s second largest ISP. Although for deals like this, there are always strings attached. In Charter’s case, it won the approval from FCC stakeholders after promising, among other things, to extend high-speed broadband connections to the hitherto under-served areas in the states the new company would operate in.

In its announcement on July 27, the Commission claimed Charter has failed to add an additional 145,000 households and businesses in New York State’s rural areas to the internet network. Specifically, the Commission listed five areas where Charter has not fulfilled its promises:

  • The company’s repeated failures to meet deadlines;
  • Charter’s attempts to skirt obligations to serve rural communities;
  • Unsafe practices in the field;
  • Its failure to fully commit to its obligations under the 2016 merger agreement; and
  • The company’s purposeful obfuscation of its performance and compliance obligations to the Commission and its customers

As a result, the Commission is asking Charter to sell its Time Warner Cable assets, and to find a successor to carry out its obligations within 60 days. Charter said it would appeal.

If merging two businesses is complex and expensive, it is no less so to break a combined business that has been in operation for two years. The “Time Warner” brand is currently also involved in another, more expensive merger case with AT&T, which is also facing the danger of being forced to de-merge.