T-Mobile, UScellular ask the FCC to hurry up and approve their proposed transaction
It has been nearly one year since T-Mobile and UScellular agreed on a deal between the second and fifth largest US wireless carriers respectively. The deal still awaits regulatory approval by the FCC and the Justice Department. The latter two agencies are using their fine-tooth combs to go over the deal before approving it possibly because T-Mobile has been active in the M&A market picking up Sprint, Mint Mobile, and some small MVNOs.
T-Mobile and UScellular have updated the FCC about the progress they are making toward closing their transaction
Additionally, there have been complaints that some promises made by T-Mobile related to employment and store closings while working to close on its $26 billion acquisition of Sprint were never kept. The terms of the UScellular deal call for T-Mobile to acquire UScellular's wireless operations which include customers, retail stores, and 30% of its wireless spectrum. T-Mobile's total obligations for the acquisition come to $4.4 billion which includes taking on $2 billion of UScellular's debt.
T-Mobile seeks to acquire UScellular's retail stores. | Image credit-UScellular
If one of the major US carriers knows the value of spectrum, it is T-Mobile. The wireless provider was the first in the country to realize that its 5G network should be built around the 2.5GHz mid-band airwaves it took control of when it purchased Sprint. Acquiring that spectrum was the reason why T-Mobile went after its long-time rival in the first place. In an effort to speed up the process of closing on the UScellular transaction, attorneys for the latter and T-Mobile recently met with the FCC.
During the meeting, T-Mobile and UScellular updated the FCC on what is going on behind the scenes with the proposed deal. At the same time, the carriers asked the FCC to act quickly on the request to transfer the portion of UScellular's spectrum that is going to T-Mobile in the transaction. But not every wireless organization is enamored with the deal, including some groups that deal with wireless in the rural areas of the country.
The Rural Wireless Association (RWA), along with the Communications Workers of America (CWA), Public Knowledge, New America's Open Technology Institute, and EchoStar submitted a filing with the FCC on April 23rd. In the filing, the organizations asked the FCC not to rush and make a decision that could harm competition in the industry. The group specifically pointed out that approving the T-Mobile-UScellular deal could lead to price increases for wireless service in the US. with UScellular gone. It also asked the FCC to consider T-Mobile's dominating position in licensing spectrum.
Based on past deals, the T-Mobile-UScellular transaction could close this summer
For example, Echostar, the parent company of the fourth-largest carrier in the States (Boost Mobile) has complained that T-Mobile and UScellular have not been able to justify why the deal is necessary or is in the public interest. As you might imagine, the CWA's concern is over potential store closings. The union estimates that following the acquisition of Sprint, T-Mobile closed 30% of its retail stores cutting 21,616 jobs.
The FCC and the DOJ could take some more time to approve the merger. After all, the T-Mobile-Sprint transaction took 703 days from the date the deal was announced to the day it closed. To be sure, the latter was a more complex deal which required the additional time for the regulatory agencies to do their due diligence. However, a much less complex acquisition, T-Mobile's purchase of Mint Mobile took 413 days. There might be more moving parts to the UScellular transaction (the stores, the customers, the spectrum) but applying that figure to the UScellular transaction would bring us to a potential closing date this summer, possibly July 15th.
Meanwhile, the FCC has asked other wireless firms impacted by the T-Mobile deal to file a report with the FCC that explains how these companies will be impacted by the transaction. The firms that received this request include AT&T, Verizon, Comcast, Charter Communications and Cox Communications. They have until May 13th to submit their responses to the FCC.
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