The T-Mobile-MetroPCS merger has moved one step closer to the finish line now that the Department of Justice has signaled it doesn’t oppose the deal.
The department allowed a required waiting period to pass without objection, T-Mobile parent Deutsche Telekom said Wednesday, bringing the deal to an “important staging post.”
The merger is not yet assured, however. There are other regulatory hurdles to clear, including approval by the Federal Communications Commission and the Committee on Foreign Investment.
MetroPCS shareholders also must agree; they are scheduled to vote on the merger on April 12.
Sending a Signal?
Still, expiration of the DoJ deadline was significant not only for T-Mobile and MetroPCS, but also for the industry, said Ritch Blasi, SVP or mobile and wireless at Comunicano.
“The DoJ seems to be sending a signal that having fewer but more robust mobile networks will be required to handle the continued growth and reliance on wireless services,” he told the E-Commerce Times.
The FCC, by contrast, is often concerned about the accumulation of assets, Blasi noted — specifically spectrum holdings.
The FCC needs to re-evaluate how it views consolidation for an industry with unlimited growth potential but limited airwaves, he suggested. “Hardware and software are byproducts of technology — only God can make more air.”
No-Brainer of a Merger
That said, even a regulatory purist is unlikely to object to this transaction, said T. Barton Carter, a professor of communication and law at Boston University, who predicts T-Mobile and Mobile PCS will get all of the necessary regulatory sign-offs.
“Unlike the AT&T, T-Mobile proposed merger, this transaction is not viewed as a threat — by most people — to competition,” he told the E-Commerce Times.
T-Mobile merging with one of the “big three” wireless providers raised hackles because it would have narrowed competition, he said. “In this case, T-Mobile is bringing in a carrier from outside, so to speak. So it is a procompetitive merger instead of an anticompetitive one.”
‘Bigger, Better, Bolder’
T-Mobile and MetroPCS unveiled their plan to merge last October, saying the tie-up would create a “bigger, better, bolder” wireless provider with “expanded scale, spectrum and resources” to compete.
The announcement followed by some 10 months AT&T’s decision to abandon its attempt to acquire T-Mobile, in the face of regulatory resistance. Even then, it did not appear that this new proposed T-Mobile proposed tie-up would meet with much trouble, even though the two companies are competitors.
“The success of the merger will depend on how quickly T-Mobile can cost-effectively utilize MetroPCS assets to fill in coverage gaps, increase network capacity and migrate MetroPCS customers to the new network,” Blasi said.
Actually, the industry is mulling over another scenario as well — the possibility that MetroPCS shareholders — not regulators — will kill the deal.
“I think it is the shareholder vote that will prove to be the toughest hurdle,” said Boston U’s Carter. “Some shareholders have voiced objections to the deal.”
Indeed, two key shareholders, P. Schoenfeld Asset Management and Paulson & Co., have let MetroPCS’ board know they don’t like the terms of the deal. The opposition was enough to postpone the vote from March 28 to April.