FCC chairman backs T-Mobile-Sprint deal in key endorsement

Image: CNN

WASHINGTON, D.C. — A key federal regulator says he plans to approve wireless carrier T-Mobile’s $26.5 billion takeover of rival Sprint, a crucial step for the deal’s approval.

Federal Communications Commission Chairman Ajit Pai said Monday he agreed to back the deal because the two companies had promised the government steps that would expand mobile internet access in rural areas and help the rollout of 5G, the next generation of mobile networks.

While Pai’s backing is key to the deal, further steps remain. The full commission must still vote, and the Justice Department must also clear it.

Pai said Monday that the combination will help bring faster mobile broadband to rural Americans. He said the companies have committed to deploying a 5G network that would cover 99% of Americans within six years. 5G promises faster speeds and could support new technologies. The companies also said they would divest a prepaid cellphone business, Boost Mobile, to address antitrust concerns.

Pai said T-Mobile US Inc. and Sprint Corp. would suffer "serious consequences" if they don't meet their FCC commitments, including the possibility of having to pay billions to the Treasury Department.

Sprint and T-Mobile argue that the combination will lead to better 5G service, and have made promises before on not raising prices, creating U.S. jobs and building a home-internet business to compete with cable companies as well as Verizon and AT&T.

Public-interest and labor groups as well as Democratic lawmakers have raised concerns about industry consolidation leading to wireless price increases and job cuts.

The Obama administration rebuffed the companies' earlier effort to merge, as well as an attempted deal between AT&T and T-Mobile, on concerns that such deals would hurt competition in the wireless industry.

Shares of T-Mobile jumped 6% in morning trading, while Sprint's stock soared 24%.

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