FCC Approves T-Mobile-Suncom Merger without USF Cap
The FCC cleared T-Mobile’s $2.4 billion acquisition of Suncom Wireless, saying in an order that the merger won’t hurt competition. T-Mobile and Suncom expect the merger to close this month instead of in April, as they had predicted, they said. Unlike its handling of other mergers, the FCC didn’t impose a Universal Service Fund cap.
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“The proposed transaction would enable T-Mobile to expand its wireless footprint in the Southeast United States, Puerto Rico and the U.S. Virgin Islands,” the order said. “It would also provide customers of both companies access to seamless in-network services across a broader geographic area, including through T-Mobile’s plans for expanding and upgrading Suncom’s network.” The order said in a footnote that T-Mobile relies on roaming by Suncom to offer service in some markets.
The companies both use GSM technology, so “T-Mobile should be able to integrate the two networks quickly with minimal disruption to customers, and many customers should be able to use their existing handsets,” the FCC said.
FCC Commissioner Michael Copps said he was “pleased” to vote for the merger. He had dissented from approval of AT&T’s acquisition of 700 MHz spectrum from Aloha Partners and last year issued a partial dissent on the AT&T-Dobson merger. He was the only commissioner to release a separate statement. “Today’s decision allows the smallest of the four nationwide carriers to acquire spectrum and wireless customers in five states, as well as Puerto Rico and the U.S. Virgin Islands,” Copps said. “The unopposed transaction does not trigger the 70 MHz spectrum screen that the FCC applied until several months ago (when, over my strong objection, it raised that cap to 95 MHz). Nor should it decrease competition in any part of the United States because the company being acquired does business almost entirely outside the existing footprint of the acquiring company.”
“Contrary to expectations and decisions on similar mergers involving a Tier 1 carrier and a regional player, the FCC did not apply a USF cap to this deal,” said Jessica Zufolo, an analyst with Medley Global Advisors. That “leaves open the possibility” the FCC could approve the Verizon Wireless-Rural Cellular Corp. merger without a USF cap, she said. “In approving this transaction, the FCC has given T-Mobile a leg up as it seeks to strengthen its presence in these Southeastern markets already heavily served by AT&T Mobility and Alltel,” Zufolo said. “The same is true for Puerto Rico and the Virgin Islands where Verizon wireless and Centennial wireless have a sizable share.”