Can you believe it's been almost two whole years since T-Mobile and Sprint announced their firm intention
to join forces in a mega deal initially estimated at $26.5 billion? How time flies when you're trying to radically transform the US wireless industry
in a move requiring approvals from roughly a million different federal and state agencies.
When T-Mobile announced on April 1
(no joke) that its combination with Sprint was finalized, we naturally assumed that meant all the formalities had been completed and there was no longer any reason why the two wireless service providers could not be lawfully joined together in a mutually beneficial merger. As it turns out, however, there might still be one loose end. Yes, really.
California is playing hard to get
The CPUC (California Public Utilities Commission) is not usually in the spotlight much as far as the mainstream tech media is concerned, but due to its stubbornness in holding off a deal cleared by everyone from the Department of Justice
to the Federal Communications Commission
a long time ago, the regional regulatory agency has made a lot of headlines in the last few months.
Most recently, the CPUC gave T-Mobile and Sprint a preliminary vote of confidence
on a series of strict new conditions, strongly suggesting final approval was on the cards for April 16. But because nothing was guaranteed and the process was taking too long, Mike Sievert warned the Commission
the very day before he officially became the "New T-Mobile" skipper his company would go ahead with the merger even in the absence of a formal green light.
Unsurprisingly, that prompted a stern ruling from CPUC Commissioner Clifford Rechtschaffen
highlighting "no person or corporation... shall merge, acquire, or control... any public utility organized and doing business in this state without first securing authorization to do so from the commission." In other words, New T-Mobile may not be allowed to "do business" in California until and unless the CPUC authorizes Magenta's acquisition of Sprint.
Right now, it's unclear if the aforementioned April 16 vote will still go ahead and whether or not the outcome of the vote will be affected by T-Mobile's decision to prematurely announce the completion of the merger.
Will the matter be settled in court?
The short answer to that otherwise very complicated question is... yeah, probably
. That's because T-Mobile essentially refused to continue playing the waiting game as it doesn't recognize the CPUC's jurisdiction over this vital transaction for the company's future
and US 5G network development as a whole.
Despite that "abiding" view, Mike Sievert insisted in his March 31 letter addressed to Commissioner Clifford Rechtschaffen and Administrative Law Judge Karl Bemesderfer of the CPUC that T-Mobile was "fully cooperative" in a 20-month review process, making "nearly 50 voluntary California-specific commitments in connection with the deal" it's still ready to honor.
Mike Sievert is the CEO of New T-Mobile
T-Mo is however unwilling or unable to meet "a number" of other conditions that not only exceed the CPUC's jurisdiction, at least in Sievert's view, but are also "practically impossible, unfair, and discriminatory" to Magenta vs its competitors. At the end of the day, this seems to have turned into a matter of principle, as the California Public Utilities Commission remains adamant it can block New T-Mobile from operating on its state turf.
As such, several analysts see a trial on the horizon
, although it's not really clear what that means from a consumer standpoint. As far as T-Mobile is concerned, the merger is a done deal, which might have never been the case if the transaction was delayed any further than April 1 given the "unprecedented uncertainty and risk in the financial markets" caused by the COVID-19 crisis.