At the 11th hour of merger talks, T-Mobile US, Inc., CEO John Legere and Sprint, Corp. Executive Chairman CEO Marcelo Claure have taken the lead in negotiating with the Department of Justice as a decision looms on the $26 billion deal, according to sources familiar with the matter.
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The two principles are stepping in as T-Mobile and Sprint hammer out concessions in an effort to get T-Mobile’s purchase of Sprint approved; as FOX Business was first to report a decision is expected as soon as next week. According to one source with knowledge of the matter, Timotheus Höttges, CEO of T-Mobile parent company Deutsche Telekom, was in Washington, D.C. to join in the meetings and expedite the review process—and he will not leave the states until a decision had been made.
This could not be independently confirmed.
Meanwhile, there is speculation among telecom insiders who deal with the DOJ that the Antitrust Department led by Assistant Attorney General Makan Delrahim will make an announcement before a federal judge holds a pre-trial hearing on Friday, June 21st on the lawsuit brought by 10 state attorneys general to block the merger this past week.
Legere and Claure are debating a number of possible concessions with DOJ, as previously reported by FOX Business, including requiring the combined companies to divest a substantial portion of their spectrum network. Sprint’s roughly 200 megahertz of spectrum, an amount larger than any other telecom company in the U.S. owns, was a key selling point for T-Mobile in their proposed acquisition.
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Should the deal win approval without the companies being forced to divest spectrum, they would have a wireless network almost double the size of AT&T and almost triple the size of Verizon. Other possible concessions include divesting prepaid businesses like Virgin Mobile, in addition to divesting Boost Mobile—a move the companies agreed to make to gain approval from the Federal Communications Commission. The companies also agreed not to raise prices for three years.
Delrahim is also said to be considering having the companies divest postpaid customers and possibly giving up retail locations as well. A person close to the talks described the discussions as “fluid,” and while the deliberations could break down over the weekend, this person indicated that as of now they are progressing.
FOX Business has learned that the companies have lined up possible buyers for their divestitures and developed a legal strategy to deal with the onset of state lawsuits. A coalition of 10 state AGs led by New York Attorney General Letitia James and California’s Xavier Beccera filed a lawsuit in Manhattan federal court on Tuesday to stop the deal on antitrust grounds. But as FOX Business reported, the companies believe they can thwart the state action once they get DOJ approval because the state case was filed before final concessions were made.
The DOJ, T-Mobile, and Sprint did not respond to FOX Business’ request for comment.
While Delrahim has yet to make an announcement, he is facing pressure from all sides. His own DOJ staff has been opposed to the merger which would reduce the number of major wireless carriers from four to three, arguing it would possibly lead to higher prices for consumers.
The White House has been encouraging him to approve deal; top economic advisers believe the new company will be a formidable competitor for foreign entities, including those in China, in the ongoing battle to build a 5G wireless network, according to an earlier FOX Business report.
The Trump administration has made 5G development both a national security and an economic objective. The development of such super-fast wireless networks are expected to be an economic boom, adding potentially hundreds of billions of dollars to the U.S. gross domestic product.