The ongoing U.S. government shutdown is delaying an important regulatory approval necessary for T-Mobile US to close on its $26 billion acquisition of rival Sprint. That deal has been pressed by both operators as necessary for the combined entity to provide a robust 5G competitor to market heavyweights Verizon and AT&T.
The U.S. Federal Communications Commission (FCC) will shut down all non-essential activities later today due to the government shutdown. Those non-essential activities include its informal 180-day review process of telecom-related transactions.
The T-Mobile/Sprint deal currently sits at day 85 of that review process, meaning the FCC can take up to 95 more days to review the proposal. That review process involves looking at whether the proposed deal would harm competition in the marketplace or if a proposal needs to be altered to accommodate those concerns.
The FCC started its review of the deal on June 18, 2018. It then paused the review process after 55 days on Sept. 11, after T-Mobile and Sprint submitted new documents on the deal. The review process started back up again on Dec. 4.
T-Mobile has said it expects the deal to be approved by mid-2019. The carriers did not respond by press time to questions regarding any potential impact from the current government shutdown on that timeline.
The deal last month received approval from the Committee on Foreign Investment in the United States (CFIUS). It also was decreed as not raising national security, law enforcement, or public safety concerns by the U.S. Department of Justice, Department of Homeland Security, and Department of Defense.
5G Competition and China
T-Mobile has been vocal that the acquisition of Sprint was necessary to bolster the carrier’s ability to launch 5G services with enough infrastructure resources to compete against Verizon and AT&T.
“Only the combined company will have the network capacity required to quickly create a broad and deep 5G nationwide network in the critical first years of the 5G innovation cycle – the years that will determine if American firms lead or follow in the 5G digital economy,” the company noted in a press release tied to announcing the deal.
Company executives have since continued to highlight the 5G opportunity their combined operations will bring to the market. T-Mobile CEO John Legere told investors during the company’s third quarter 2018 results conference call that it would deploy 5G equipment in six of the nation’s 10 largest markets by the end of that year.
Verizon in October launched 5G services in a handful of markets using a proprietary technology that it will update to standards-based technology as equipment becomes available. AT&T in mid-December launched its standards-based mobile 5G service in 12 markets.
The T-Mobile/Sprint deal has also been a part of the U.S. government’s attempt to prevent telecom operators from using 5G equipment from Chinese vendors like Huawei and ZTE. Published reports indicated that one of the conditions for gaining U.S. government approval of the deal was that both T-Mobile US and Sprint did not use infrastructure from those vendors in their network.