Federal Communications Commission Chairman Ajit Pai plans to back wireless carrier T-Mobile's $26.5 billion takeover of rival Sprint, a crucial step for the deal's approval. Pai said Monday he agreed to vote for the deal because the two companies had promised the government steps that would expand mobile internet access in rural areas and help the rollout of 5G, the next generation of mobile networks.
While Pai's backing is important to the proposed deal, further steps remain. The full commission must still vote, and the Justice Department must also clear it. Critics will also make the case that combining the country's No. 3 and 4 carriers will ultimately restrict competition and lead to higher prices for consumers.
The FCC's Pai said combining T-Mobile and Sprint will help bring faster mobile broadband to rural Americans. He said the companies have committed to deploying a 5G network that would cover 99% of Americans within six years. 5G promises faster speeds and could support new technologies. The companies also said they would divest a prepaid cellphone business, Boost Mobile, to address antitrust concerns.
Pai said T-Mobile U.S. Inc. and Sprint Corp. would suffer "serious consequences" if they don't meet their FCC commitments, including the possibility of having to pay billions to the Treasury Department.
Public-interest and labor groups as well as Democratic lawmakers have raised concerns about industry consolidation leading to wireless price increases and job cuts.
A merger between the nation'swould leave just three major U.S. carriers, meaning T-Mobile and Sprint could someday raise prices once they don't have to compete with one another for customers.
The Obama administration rebuffed the companies' earlier effort to merge, as well as an attempted deal between AT&T and T-Mobile, on concerns that such deals would hurt competition in the wireless industry.
Shares of T-Mobile jumped 6% in morning trading, while Sprint's stock soared 24%.