Once again, U.S. regulators are putting the brakes on a potential T-Mobile acquisition.
Sprint, which has been eyeing T-Mo for the past few months, is now rethinking its bid after a surprising amount of pushback from the FCC and the Justice Department, the Wall Street Journal reports.
While a Sprint/T-Mobile deal makes plenty of sense — and both companies seemed eager to join up to be more competitive against AT&T and Verizon — it also introduces a host of problems for the U.S. wireless industry. In particular, it would reduce the number of major wireless carriers from four to three, something that the FCC noted as a big reason for blasting the AT&T/T-Mobile deal a few years ago.
The FCC ended up issuing a scathing 157-page report against the $39 billion AT&T/T-Mobile deal, which ultimately led to the whole thing falling apart. AT&T ended up paying out a bunch of spectrum and cash to T-Mobile, which helped drive the company’s growth last year.
Sprint, which is majority owned by Japanese telecom giant Softbank, likely figured it would have to deal with some regulator hesitance with this latest deal — but it sounds like the company’s executives were unprepared for the level of regulator resistance it has seen. According to the WSJ, Sprint chairman Masayoshi Son, founder of Softbank, and Sprint CEO Dan Hesse both met with the FCC and Justice Department over the past month but found that regulators were skeptical about consolidating the wireless market further.
A rockstar telecom executive in Japan, Son could end up working on another deal for T-Mobile, but that would likely take a lot of planning.
At this point, it’s T-Mobile’s existing customers who have the most to lose: While a Sprint/T-Mobile acquisition would make both companies more competitive, it would also likely mean the end of the many “Uncarrier” initiatives T-Mobile launched last year, like its early upgrade program and free international roaming.
While the Uncarrier spiel initially seemed like a marketing gimmick, T-Mobile ended up forcing the hands of most other major U.S. carriers with many of its initiatives. In the end, T-Mobile’s “Uncarrier” offerings proved the FCC’s point — competition ultimately makes the wireless industry better for consumers.