US government bodies give go-ahead to T-Mobile/Sprint merger

19 December 2018 | Alan Burkitt-Gray

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Four official US organisations have told the country’s telecoms regulator that they have no objection to T-Mobile US taking over Sprint.

The approvals come from the Committee on Foreign Investment in the United States (CFIUS), the Department of Justice, the Department of Homeland Security and the Department of Defense. The last three submitted a filing with the Federal Communications Commission (FCC) and confirmed they have no objections to the merger and have withdrawn its request to defer action on the transaction.

“We are pleased to achieve both of these important milestones in the journey to build the New T-Mobile,” said John Legere (pictured), the CEO of T-Mobile US, majority-owned by Deutsche Telekom, which will be dominant in the expanded company.

Sprint and Deutsche Telekom both approved the merger at the end of October 2018.

SoftBank, the Japanese company that has a majority shareholding in Sprint, has said it will assign its shares to Deutsche Telekom’s control in the non-cash deal that will create a company valued at $146 billion.

The decision by CFIUS in particular puts an interesting light on moves by both Deutsche Telekom and SoftBank to remove Huawei network equipment from their systems in Europe and Japan. US politicians have shown concern at the presence of Chinese systems in the parent companies of the third and fourth mobile network operators in the US. Likewise, Deutsche Telekom’s consulting unit, Detecon, said in August that it would stop work in Iran.

Legere said: “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 US government will continue with the New T-Mobile.”

No one from either company has yet said anything about the future of their wholesale operations after the merger. The German operator renamed its wholesale business as Deutsche Telekom International Carrier at Capacity Europe in October. Sprint has so far remained quiet, though some observers expect its wholesale business to be absorbed into Deutsche Telekom’s operation.