Regulators want T-Mobile and Sprint to spin off new wireless carrier to ease competition concerns

T-Mobile CEO John Legere poses with Spring CEO Marcelo Claure before a Senate subcommittee hearing last June. (Twitter Photo)

One of the chief concerns of the mega-merger between T-Mobile and Sprint is that it would reduce the number of major U.S. wireless carriers in the U.S. from four to three. Regulators reportedly want the combined company to fix that issue in order to grant approval of the deal.

Bloomberg reports that top Justice Department officials want T-Mobile and Sprint to set the table for a new wireless carrier, complete with its own network, as a concession for approval of the $26.5 billion merger. While significant concessions are often a part of big mergers, a requirement for T-Mobile and Sprint to spin out a new national competitor calls into question whether such requests would outweigh the benefits for the two companies to merge.

GeekWire reached out to T-Mobile for comment, and we will update this post if we hear back.

Last month, reports surfaced that Justice Department officials warned the companies that their merger wasn’t likely to receive approval under the current proposal. According to the report, DOJ officials are not buying the companies’ arguments that a combined T-Mobile and Sprint will increase competition with larger rivals ATT and Verizon and up U.S. competitiveness in the next generation of wireless technology known as 5G.

While T-Mobile and Sprint continue to lobby Justice Department officials, it appears the companies are close to satisfying another major regulator, the Federal Communications Commission. FCC Chair Ajit Pai earlier this month gave his approval of the merger thanks to commitments from the two wireless companies.

In April 2018, T-Mobile and Sprint agreed to merge and create a $146 billion company under the T-Mobile name. The companies plan to complete the merger this year if they receive regulatory approval. The combined company would operate under the T-Mobile brand, with its primary headquarters in Bellevue, Wash.

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