T-Mobile could have some issues getting regulators to approve US Cellular purchase

T-Mobile could have some issues getting regulators to approve US Cellular purchase
As you already know, T-Mobile announced today that it is buying "substantially all of US Cellular's wireless operations" and about 30% of its spectrum for $4.4 billion. But today is just the beginning of a long journey that T-Mobile expects to result in the closing of the transaction by the middle of next year. However, considering that the nation's second-largest carrier has upset its reps, other employees, customers, and regulators, there is a chance that this deal never gets done.

The regulatory agencies stopped AT&T from buying T-Mobile in 2011

You might recall that in 2011, AT&T announced that it was buying T-Mobile for $39 billion which would have made AT&T the nation's largest carrier had the deal closed. But almost exactly 9 months after the deal was announced, AT&T realized that it was not going to get regulatory approval for the transaction and pulled out of the deal. The breakup fee that AT&T had to pay T-Mobile for busting up the deal included $3 billion in cash, a seven-year 3G roaming agreement, and AWS spectrum in 128 markets including 12 of the top 20.

Many point to this payout as the start of the amazing turnaround that made T-Mobile the fastest-growing and most innovative of the big four U.S. wireless providers. The next step was to hire John Legere as CEO, which took place in September 2012.

Getting regulatory approval from the FCC and the DOJ is not an easy task, especially if you've done something to piss off the agencies or your customers who then complain to the agencies. T-Mobile had a hard enough time getting the FCC and DOJ to approve the $26 billion acquisition of Sprint which closed in 2020. To get the deal approved, a company had to replace Sprint to keep the number of major wireless firms at four. Dish stepped up to the plate and agreed to take on that burden.

But Dish is having problems gaining traction as the fourth largest U.S. wireless carrier and while it has met FCC targets in terms of 5G penetration, Dish Wireless has been losing the customers it took over after buying Boost Mobile as part of its plan to become the "fourth nationwide facilities-based network competitor."

Back in 2019, around one year after T-Mobile proposed to buy Sprint for $26 billion, then-CEO John Legere reiterated a previous statement saying that the deal would be "jobs-positive" from the first day. He said, "So, let me be really clear on this increasingly important topic. This merger is all about creating new, high-quality, high-paying jobs, and the New T-Mobile will be jobs-positive from Day One and every day thereafter.That’s not just a promise. That’s not just a commitment. It’s a fact." About three years after the deal closed, T-Mobile's headcount was 9,501 employees lower.

T-Mobile's Legere said the Sprint acquisition would be job positive from day one which it clearly wasn't

Recently, T-Mobile raised prices on some legacy plans after saying that it would not raise prices, and there is concern that reps are being pressured to meet certain performance metrics to keep their jobs. As a result, we are hearing more stories from upset T-Mobile customers who are discovering that certain items that they didn't authorize, such as new lines or insurance for equipment, are being added to their accounts without permission.

With other issues such as data breaches, and reports of T-Mobile reps being recruited for illegal SIM Swap campaigns, there is a possibility that the FCC or DOJ block the US Cellular deal. However, US Cellular is not the size Sprint was and the DOJ, charged with looking for and punishing companies violating anti-trust regulations, isn't likely to find a problem on this front.

The one question that the FCC needs to ask

The FCC might be happy to see a large wireless firm taking over for US Cellular in the under served rural areas of the U.S. On the other hand, the FCC and DOJ could wonder whether they should reward T-Mobile for its recent "bad behavior."

While the purchase of Ka’ena, which includes its Mint Mobile MVNO, was approved by regulators, that $1.35 billion deal was considered to be very small. If enough customers submit complaints to the FCC, the agency might decide to take a deeper look at what's going on with the carrier and demand that the company make a change in how it pays its reps in order to get approval for the deal. But don't hold your breath. The acquisition will make T-Mobile bigger but it will give rural Americans better mobile and internet service which is what the FCC really wants.

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The question that the FCC must ask is whether the T-Mobile-US Cellular deal will bring incidents like reps adding recurring charges for items not ordered to rural Americans' bills.

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