Technology

Sprint and T-Mobile pass first big hurdle to merger, says unconfirmed report

Sprint and T-Mobile have reached an agreement to merge

Sprint CEO Marcelo Claure and T-Mobile CEO John Legere announce that the two companies have reached an agreement to come together to form a new company - one that will deliver the first 5G nationwide network.
Up Next
Sprint CEO Marcelo Claure and T-Mobile CEO John Legere announce that the two companies have reached an agreement to come together to form a new company - one that will deliver the first 5G nationwide network.

The merger between Sprint and T-Mobile passed its first big hurdle — the government’s review based on national security issues, according to a published report.

Their deal gained approval from the Committee on Foreign Investment in the United States, or Cfius, said an online report from The Wall Street Journal. The report did not identify sources but said both companies were told Monday of the approval.

Cfius, which is led by the U.S. Treasury, became involved partly because of the sensitive nature of the telecommunications industry and also because Sprint and T-Mobile are controlled by non-U.S. based companies.

Tokyo-based SoftBank Group Corp. gained Cfius approval to buy control of Sprint in 2014. The two companies won approval by agreeing to add a national security director to Sprint’s board of directors and by agreeing to remove equipment made by China-based Huawei Technologies from the network of Clearwire Corp., which also was part of the 2014 SoftBank deal.

T-Mobile’s largest owner is Germany-based Deutsche Telekom, which would be the largest owner of the merged T-Mobile and Sprint.

One group has challenged the merger over complaints about SoftBank’s and Deutsche Telekom’s use of Huawei equipment in their operations. Protect America’s Wireless issued a statement saying it was hopeful that Cfius had “required tough conditions” on its approval.

“The American people deserve a seat at the table for that debate. In a global economy and a dangerous world, a merger that purports to be America’s pathway to 5G requires intense scrutiny, especially when it relies on so much foreign investment,” its statement said.

Last week, Bloomberg had reported that Sprint and T-Mobile were close to receiving Cfius approval “once they complete an agreement to address national security concerns over the combination.” It did not report the nature of those concerns or what commitments the companies would need to make.

The Wall Street Journal said neither Cfius nor the merging companies would comment.

Merging No. 4 Sprint into No. 3 T-Mobile still faces scrutiny by the Federal Communications Commission and the U.S. Department of Justice’s antitrust division as well as some states.

Opponents have begun to organize in hopes of influencing those bodies to block the merger. Several labor, telecom, consumer and other groups formed the 4Competition Coalition last week, calling the deal “presumptively unlawful.”

On Monday, two economic institutes released a study that said the merger would cut wages among employees of wireless retail stores by as much as 7 percent in some markets. The study said the impact on worker wages would hit retail store employees at Verizon and AT&T as well as those at Sprint and T-Mobile stores.

T-Mobile and Sprint have pitched the merger to the public and to regulators as a job creator, and touted how it would lower prices for consumers and allow the new company to build a 5G wireless network unrivaled worldwide.

Related stories from Kansas City Star

Mark Davis writes about business for The Kansas City Star with attention to Sprint, investing, the economy and scams. He has been a winner and finalist in national competitions held by the Society for Advancing Business Editing and Writing.
  Comments