UPDATED with WGAW statement, 10: 26: The $26 billion merger of Sprint and T-Mobile will get the blessing of the Federal Communications Commission in exchange for pledges by the company to build out a 5G network that will cover 99% of the U.S. by 2026, officials said Monday.
The WGA West issued this statement Tuesday morning: “Like prior mega-mergers in the telecom industry, the proposed T-Mobile/Sprint merger is anti-competitive, threatening consumers and creators alike. It has become painfully clear that placing conditions on this type of deal will not protect competition. We should not allow history to repeat itself. The Writers Guild of America West continues to call on the Department of Justice and state regulators and attorneys general to reject the harmful combination of T-Mobile and Sprint.”
Shares in Sprint reacted to the FCC’s support by leaping 19% to close at $7.34, their highest level in nearly two years. T-Mobile stock gained nearly 6% to around $78.29. The gains were stronger earlier in the session, but both stocks lost some ground after a Bloomberg report that the Department of Justice was leaning against giving its OK to the deal. Senior FCC officials asked Monday morning about the status of the DOJ’s review declined to address that key piece of the transaction.
The FCC said it will formally consider the T-Mobile-Sprint deal on June 15, with Chairman Ajit Pai planning to present a draft order recommending approval “in the coming weeks.”
The deal will create a stronger No. 3 competitor for the two dominant U.S. telecom players, AT&T and Verizon. In order to receive approval from the FCC, the companies have promised to build out a 5G network that will be available for 97% of the U.S. population within three years of the deal’s closing, and for 99% within six years. An estimated 90% of rural communities will gain access to 100 Mbps broadband within six years, and 99% at 50 Mbps, according to projections by FCC officials.
Penalties for failing to meet the buildout targets would run into the billions of dollars, the FCC said.
Another concession by the companies is the divestment of the Boost Mobile prepaid wireless unit.
In a statement, FCC Chairman Ajit Pai said the agreement with the companies helps the regulatory agency continue to meet two of its stated goals. One is “closing the digital divide” in rural America, and the other is advancing the competitive position of the U.S. in the rollout of 5G wireless technology.
“The construction of this network and the delivery of such high-speed wireless services to the vast majority of Americans would substantially benefit consumers and our country as a whole,” Pai said.