Federal Communications Commission Chairman Ajit Pai on Monday recommended approval of the proposed $26 billion merger of Sprint and T-Mobile, giving the deal better prospects of clearing regulatory hurdles.
In a statement, Pai said that pledges by both companies to deploy fifth generation, or 5G, broadband speeds across most of the United States could meet an FCC priority of bridging the digital divide in rural America.
"This 5G network would also reach deep into rural areas, with 85% of rural Americans covered within three years and 90% covered within six years," Pai said. "Additionally, T-Mobile and Sprint have guaranteed that 90% of Americans would have access to mobile broadband service at speeds of at least 100 (megabits per second) and 99% would have access to speeds of at least 50 Mbps."
Pai also noted that both Sprint and T-Mobile have made concessions to assuage regulatory concerns, including a commitment to not raise wireless fees for three years and to divest themselves of prepaid wireless brand Boost Mobile to give consumers another competitive option.
The two companies also promised a rapid build out of its 5G network, seeking to cover at least two-thirds of the U.S. population with download speeds that exceed 100 megabits per second. Within six years of the merger closing, the companies said 90% of Americans could access such download speeds.
The companies outlined those concessions in a filing with the U.S. Securities and Exchange Commission on Monday.
The concessions appeared to help tilt Pai and another FCC commissioner toward favoring the deal.
Later on Monday, fellow FCC Commissioner Brendan Carr signaled his support for the deal.
"I support the combination of T-Mobile and Sprint because Americans across the country will see more competition and an accelerated buildout of fast, 5G services," Carr said in a statement. "The proposed transaction will strengthen competition in the U.S. wireless market and provide mobile and in-home broadband access to communities that demand better coverage and more choices."
The two statements improve the chances that Sprint and T-Mobile can realize a long-sought goal of combining forces, although the Justice Department still has an opportunity to weigh in on the matter. In April, reports surfaced that Justice Department officials were not keen on the combination, citing erosion of competition in the wireless market should the bottom two of the four major wireless carriers merge.
Monday's statements don't signal a full FCC endorsement of the transaction.
John Legere, chief executive of T-Mobile, cheered Pai's endorsement.
"I particularly want to thank Chairman Pai for his statement of support for these commitments and our merger _ as well as his ongoing leadership to help ensure our country is a leader, not a follower, in the 5G era," Legere said in a statement. "We look forward to continuing to meet and work with a variety of important stakeholders to demonstrate the powerful benefits the New T-Mobile will bring _ but today's filing is at the center of our plans to bring 5G to American consumers."
Sprint employs about 6,000 workers in the Kansas City area where it has its headquarters campus in Overland Park, Kan. If the deal goes through, it has been said that Overland Park would remain a secondary headquarters for the new T-Mobile company. T-Mobile is based in the Seattle area.
Sprint has pushed hard for a combination with T-Mobile, citing deep concerns about being able to continue as a standalone company given years of losses and withering competition in the wireless business.
