T-Mobile, Sprint tailor merger pitch for Trump

T-Mobile and Sprint are tailoring the pitch for their $26 billion merger for the Trump era, claiming it will push the U.S. closer to a 5G future and help the country beat China economically.

In previous administrations, the deal combining two of the nation’s four wireless providers would likely have long odds of being approved, but the companies’ message may have a receptive audience this time around.

{mosads}The Trump administration increasingly sees 5G, the next generation of wireless networks, as a top economic and national security priority, especially when it comes to its rivalry with China. Experts say China has been racing ahead of the U.S. on 5G.

T-Mobile and Sprint have seized on those concerns, touting the combination as essential to achieving a widespread 5G deployment, which many believe is years away from being fully realized. Building out that new network could also require large numbers of workers, appealing to President Trump’s push for jobs.

The two companies have considered merging before. When Sprint’s parent company approached the top antitrust regulators during the Obama administration — former Federal Communications Commission  (FCC) Chairman Tom Wheeler and Bill Baer, the head of the Justice Department’s antitrust division at the time — about a possible merger with T-Mobile, the two officials discouraged the plan over concerns about consolidation.

This time around, the merger appears to have better chances of winning approval from the FCC and the Justice Department. A number of wireless industry analysts are giving it about even odds, a strong position for such a contentious deal.

“We started with 50/50 odds and we’re still at 50/50 odds,” analyst Craig Moffett wrote in a blog post last week. “We’ve said all along that the arguments for and against are both equally convincing.”

Groups, though, are mobilizing against the merger ahead of a Wednesday FCC deadline to submit comments. It’s unclear how long the two agencies will take to review the deal.

The administration’s calculus could hinge on whether there’s enough competition in the wireless market and if cable companies that have recently introduced mobile service, like Comcast and Charter, can be considered serious players in the industry.

T-Mobile and Sprint’s rivals have largely stayed quiet on the deal, but some consumer groups and Democrats have come out as vocal opponents. Critics are worried that the impact of the merger will be far more damaging to the companies’ workers and low-income consumers.

“Our main concern is that the market is already highly concentrated,” said Gaurav Laroia, a policy counsel with the public interest group Free Press. “Concentrating the market further is not going to produce good outcomes for consumers.”

Verizon and AT&T are the only two other national wireless carriers, and T-Mobile and Sprint are leaders in offering low-cost plans, especially through their respective prepaid service providers, Metro PCS and Boost Mobile. Laroia argued that eliminating the competition between the two will have a huge impact on low-income customers.

“It’s good that they compete for those customers,” he said. “They’ve had to offer innovative offerings based on price at that market segment.”

The merger could also face opposition from the states even if it gets cleared by federal regulators. The labor group Communications Workers of America has also come out against the deal, predicting that it would lead to a loss of more than 28,000 jobs.

Sprint and T-Mobile declined to comment for this story.

Before the FCC, though, they have argued that the combined company will actually add 11,000 more jobs by 2024 than the two firms would have created on their own.

The companies are emphasizing the potential their merger will have for the rollout of 5G, an issue that they believe will help sway the Trump administration.

5G expansion would also require massive investments by the private sector and potentially thousands of new jobs to deploy cell stations throughout cities.

“This proposed merger is necessary to accomplish a goal critical to enhancing consumer welfare in this country: the rapid and widespread deployment of 5G networks,” T-Mobile and Sprint wrote in a filing to the FCC.

Laroia, though, notes that the companies had planned ambitious 5G rollouts prior to announcing their merger.

“It’s true that the 5G marketing is a powerful tactic,” he said. “The desire on behalf of policymakers to see that this network is deployed fast is real [but] I think that the marketing from both of these telecom companies is overblown hype.”

Still, that messaging might be hitting the right note for this administration. Top officials like FCC Chairman Ajit Pai, White House National Economic Council Director Larry Kudlow and Makan Delrahim, the assistant attorney general for antitrust, have all touted the predicted benefits from 5G.

Blair Levin, an analyst with New Street Research and a former FCC official, thinks the companies are delivering an effective message.

“I think you have to give the T-Mobile team enormous credit for successfully getting a number of members of the Trump administration to see the deal through their mental framework,” Levin said.