T-Mobile CEO John Legere, in a letter to FCC Chairman Ajit Pai yesterday, promised not to increase consumer plan prices for three years if the company’s proposed merger with Sprint is approved. Legere said the combined company will offer “the same or better” rates as either wireless carrier currently does today. T-Mobile and Sprint have said it will take around three years to fully combine their networks.
The merger is a $26 billion deal that would shrink the nation’s major wireless competition from four different providers to three, including AT&T and Verizon. The merger was proposed last April and is working its way through the government for review until regulatory authorities like the FCC and the Justice Department decide whether to approve it.
“Critics of our merger, largely employed by Big Telco and Big Cable, have principally argued that we are going to raise rates right after the merger closes,” Legere said in the letter to the FCC. (In reality, there are plenty of legitimate concerns over the deal’s potential impact on competition, consumer choice, and jobs.) “I want to reiterate, unequivocally, that New T-Mobile rates are NOT going to go up. Rather, our merger will ensure that American consumers will pay less and get more.” Although the letter is official, it’s not legally binding, and T-Mobile could decide to raise prices after the merger is approved without consequence.
T-Mobile is stepping up it’s lobbying efforts to get this deal approved. Yesterday, Politico reported that former Democratic FCC commissioner Mignon Clyburn was brought on by T-Mobile to advise the merger deal. Clyburn is a known ally to public interest groups and could potentially sway favorability in the carrier’s direction. In 2011, Clyburn opposed AT&T’s attempt to acquire T-Mobile, but according to Politico, she believes that this new deal has the potential to help bring service to rural areas and close the digital divide.
In a note to investors, New Street Research, an outfit focused on telecommunications and technology, said that this concession by T-Mobile could signal that the deal is in hot water. “The question for investors is whether this commitment is [an] indication that the deal is more likely or less likely to be approved,” the note read. “Count us in the less likely camp.”
“Generally, when it comes to mergers, the first side to offer concessions is likely to be the side that is losing,” the note continued.
In January, lawmakers announced a joint hearing between the House Energy and Commerce and Judiciary committees to take a closer look at the proposed merger. Legere and Sprint’s executive chairman Marcelo Claure agreed to testify before the panel to answer questions lawmakers may have about the deal later this month.
In a press release, committee leadership wrote, “We must hold this hearing to examine the effects on important issues like jobs, costs to consumers, innovation and competition.” They continued, “We look forward to examining this merger from the perspective of what is in the best interest of consumers and hardworking people.”
Last summer, Legere and Claure testified before Senate Judiciary, but Democratic lawmakers in Commerce have voiced concern over the merger, too, asking for yet another hearing to discuss the deal. In a letter last month, Sens. Ed Markey (D-MA), Richard Blumenthal (D-CT), Tammy Baldwin (D-WI), and likely presidential hopeful Amy Klobuchar (D-MN) requested that the Republican majority call a new hearing to probe company executives on the proposal.
“This committee should evaluate T-Mobile and Sprint’s current 5G claims and the consequences this merger would have on American wireless network innovation,” the lawmakers wrote. “This reduction in competition raises a number of important questions that the committee should address.”
“We are the Un-carrier,” Legere said in yesterday’s letter. “If we broke faith by raising rates and cutting back benefits, we would lose our loyal customers and destroy the future of our brand. I want to assure you that we would never do this.”
Legere, who has often quarreled with President Trump over Twitter, and other T-Mobile executives have been spending a lot of time in DC through the merger process, with their repeat stays at a Trump hotel recently raising eyebrows.
“The T-Mobile senior leadership team stays at a variety of hotels in DC and across the country — and they are chosen primarily based on proximity to the meetings being conducted,” a T-Mobile spokesperson said in response to the allegations last month.
