Takeaways
- Representatives of groups opposing the Sprint/T-Mobile deal say that legislators on both sides of the aisle seemed skeptical during last week’s hearing before the House Subcommittee on Communications and Technology.
- Legislators expressed concern over rural coverage, the companies’ 5G claims, and future pricing. In response, the companies’ executives used recycled talking points and introduced no new information during the hearing, representatives for groups opposing the deal told Reorg M&A.
- Due to the funerals of Rep. John Dingell, D-Mich., and Rep. Walter Jones Jr., R-N.C., the House Judiciary Committee canceled a subsequent hearing that was originally scheduled for Thursday, Feb. 14. The committee is considering rescheduling a hearing on the proposed acquisition in March, two people familiar with the transaction told Reorg MA&.
While Sprint and T-Mobile’s top executives defended their merger last week before the House Subcommittee on Communications and Technology, representatives of groups opposing the deal say that the legislators on both sides of the aisle seemed skeptical about the proposed benefits of the deal.
In particular, legislators expressed concern over rural coverage, the companies’ 5G claims, and the companies’ claims that prices will not increase. As Reorg M&A previously
reported, such concerns have been outlined continuously by opponents and Democratic lawmakers as the companies continue to tout alleged benefits of the deal.
“The CEOS were recycling their talking points: a 5G promise and the claim that the prices won’t go up,” a practitioner representing a group opposing the deal told Reorg M&A. “I didn’t think that there was anything new.” However, the practitioner noted that there did not seem to be much support for the deal on either side of the aisle, with Republicans and Democrats specifically asking questions on how the deal would impact rural coverage.
“There was a lot of skepticism and tough moments,” a representative of a second group opposing the merger told Reorg M&A. This representative said that two significant moments during the hearing stood out to him: legislators’ concern regarding current rural coverage and the companies’ claims of price decreases. “If this merger is blocked it’s going to be because of the higher prices to consumers,” the representative told Reorg M&A. “The skepticism was bipartisan, especially on rural claims.”
Rep. Peter Welch, D-Vt., made headlines when he held up coverage maps during the hearing that he called “phony” and “bogus.” Those maps showed extensive wireless coverage, including 94% of the state of Vermont. Several other representatives echoed his concerns about whether rural coverage is as extensive as the companies claim. “Right now they are misrepresenting what they are doing in rural America,” the second person told Reorg M&A.
George Slover, senior policy counsel for Consumers Reports, who testified at the Senate Judiciary Committee hearing on Sprint/T-Mobile last year, told Reorg M&A that last week’s hearing did not change the fundamental problems with the proposed deal. Slover said that there are questions regarding the details of the quality of wireless service that reaches the consumers in rural areas. “What is advertised and what is actually available may not be entirely the same,” Slover noted.
As Reorg M&A previously
reported, T-Mobile promised to freeze prices for three years if the deal is consummated. But Slover called the pricing concerns a “linchpin” in the proposed deal’s reviews and expressed skepticism regarding T-Mobile’s promise. “Can a promise by a company to act diametrically opposed to its built-in business DNA be realistically enforced or even verified?” Slover asked. “That’s why we have the antitrust laws the way they are - to discount promises and focus on what the structure of the market is.”
While the hearing will not likely impact the decision-making process of the DOJ and FCC, groups say that the hearing served to highlight some of the issues that they see with the merger, thereby elevating public awareness.
“What a hearing like this does is it shines a light,” said the representative of the second group opposing the merger. “Members care about the merger; consumers care about the merger. That is the purpose of oversight. As the decision-makers decide what to do, hearings like this focus the issue.”
Some of the issues raised at the hearing are also being considered by regulators reviewing the deal. According to the practitioner representing the first group opposing the deal, the FCC transaction team asked “extremely substantive” questions regarding the economics of the proposed transaction during a recent meeting. Subsequent meetings with the FCC commissioners focused on the transaction team’s investigation, the practitioner said. “[The commissioners] are going to rely heavily on the transaction team.”
However, Roslyn Layton, a visiting scholar at the American Enterprise Institute who testified at the Senate Judiciary Committee’s hearing on S/TMUS, said that the policy-makers are focusing narrowly on the wrong issues related to the merger. “The T-Mobile-Sprint merger is not a threat to competition,” Layton said. “Policymakers should be focusing on the real threats, like the Chinese companies that are eating our lunch in information technology, networking equipment, and mobile communications.”
Due to the funerals of Rep. John Dingell, D-Mich., and Rep. Walter Jones Jr., R-N.C., the House Judiciary Committee canceled its subsequent hearing that was originally scheduled for Thursday, Feb. 14. The committee is considering rescheduling a hearing on the proposed acquisition in March, two people familiar with the transaction told Reorg MA&.
Reorg M&A’s previous coverage of this transaction can be found
HERE.
-- Kathryn Haake and Ryan Lynch