T-Mobile US, Inc., and Sprint Corp. announced late yesterday that the Committee on Foreign Investment in the United States (CFIUS) and the interagency Team Telecom have separately approved their proposed merger.
Last week, recent media reports had indicated the companies were expecting the approval in the wake of an indication by parent companies Deutsche Telekom AG and SoftBank Corp. that they would consider limiting use of Huawei Technologies Co. equipment (TR Daily, Dec. 14).
Third parties had argued that there were national security implications raised by the proposed merger, citing business agreements between SoftBank Corp., which controls Sprint, and Chinese telecom equipment vendors Huawei Technologies Co. Ltd. and ZTE Corp., as well as Saudi Arabia’s investment in SoftBank (TR Daily, Nov. 5).
In a letter filed yesterday on behalf of Team Telecom in the WC docket 18-197 merger review proceeding at the FCC, the Department of Justice said, “The Agencies have reviewed the information provided by the applicants and analyzed the measures undertaken by the applicants to address potential national security, law enforcement, and public safety issues. Based on this review, the Agencies hereby notify the Commission that they have no objection to the grant of the applications.”
Team Telecom also includes the Department of Homeland Security and the Department of Defense.
CFIUS decisions are not public and are not placed in the relevant FCC docket, an FCC spokesperson told TR Daily.
T-Mobile Chief Executive Officer John Legere said, “We are pleased to achieve both of these important milestones in the journey to build the New T-Mobile. 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.”
The companies said that the proposed transaction “remains subject to regulatory approvals and certain other customary closing conditions, and is expected to occur during the first half of 2019.”
In a research note released today, analysts at New Street Research said, “Obviously the CFIUS blessing, provided by the nine government agencies, is good news for the deal. We caution, however, that we don’t believe the security review provides accurate tea leaves for the DOJ’s competition review (the conclusions of which we believe will be followed by the FCC in its public interest review), the states’ attorneys generals review, or the politics of the decision-making, particularly at the White House. Each of those determinations will be made on different criteria.”
The analysts also said that contrary to some media reports about the FCC’s investigation into inaccurate data on mobile broadband coverage filed by “major carriers” in the Mobility Fund Phase II proceeding, “the wireless carrier allegations were really focused on Verizon and did not implicate T-Mobile. In short, that investigation will have no bearing on the outcome of the [T-Mobile-Sprint merger review] process.”
During an interview last week for C-SPAN’s “The Communicators,” FCC Chairman Ajit Pai declined to speculate on the impact that the MF-II data investigation might have on the merger review, saying, “Oh, boy, that’s a double hypothetical! I mean, not just the merger, the merits of which I can’t talk about, but also the impact that a concurrent enforcement investigation might have on any merger. Again, I haven’t announced the identities of any carriers that we might be investigating, so I can’t obviously opine about what impact that may or may not have on the transaction that’s pending” (TR Daily, Dec. 14). —Lynn Stanton, [email protected]
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