T-Mobile-Sprint Deal May Linger Into October as FCC Vote Is Slow

(Bloomberg) -- T-Mobile US Inc.’s proposed merger with Sprint Corp. remains on hold at the U.S. Federal Communications Commission, where most commissioners have yet to vote upon the $26.5 billion deal even though the agency chairman asked for a vote in August.

The inaction means the agency isn’t likely to conclude its review of the deal until October, because of delays built into its procedures. Passage is expected because all three Republicans who comprise a majority at the agency have spoken in favor of the deal.

T-Mobile and Sprint have agreed not to close their deal until after a verdict in a multistate lawsuit, where trial is set for early December. The states say the combination of national wireless carriers will decrease competition and raise prices. The deal’s backers say it will quickly bring advanced 5G networks and create a stronger rival to leaders AT&T Inc. and Verizon Communications Inc.

At the FCC, a deadline for action of almost three weeks would kick in once three of the five FCC commissioners vote in favor of a deal. The commissioners vote electronically in a shared system. The deadline period hasn’t commenced, meaning there hasn’t been a third positive vote, a person familiar with the matter said Wednesday.

Pai voted for the deal as he sent it to commissioners on Aug. 14, the FCC said. Pai’s fellow Republican Michael O’Rielly in an interview Tuesday said he had voted. O’Rielly declined to say whether he had voted in favor. In May he spoke in favor of the deal.

With those two decisions tallied, focus is turning to Republican FCC Commissioner Brendan Carr, who in May issued a formal statement supporting the deal.

Carr and an aide have been in contact with T-Mobile representatives at least nine times since Pai asked for a vote, according to FCC disclosure filings. The documents offer limited insights into the discussions, for instance saying topics included “network and economic modeling” and issues “relevant to the Commission’s public interest and competition inquiries.”

Carr’s office didn’t respond to an email or phone call seeking comment. Tina Pelkey, a spokeswoman for the FCC, declined to comment on timing for a vote.

Calculating when the FCC must vote is complex. According to a blog post by O’Rielly last year, deadlines begin to kick in only if an item has awaited a vote for 21 days. At that point, a vote in favor by three members commences a countdown clock that initially sets a deadline of 12 days. The deadline can be extended seven days upon a commissioner’s request. In a further wrinkle, the initial 12-day deadline usually doesn’t commence until the Friday after the third vote appears in the internal system the FCC uses. O’Rielly’s blog post pleaded for a simplified, speedier system.

T-Mobile declined to comment, and Sprint didn’t immediately reply to a query.

The FCC on Tuesday said Sprint had claimed payments for 885,000 subscribers to a subsidized phone service, even though those people weren’t using the system. The claim may slow but won’t threaten FCC approval of the merger, Matthew Schettenhelm, a Bloomberg Intelligence analyst, said in a note.

“The issue won’t cause FCC Republicans to block the deal, yet they may force a significant settlement before they approve,” Schettenhelm said in the note. Approval is expected during the fourth quarter of this year, he said.

--With assistance from Scott Moritz.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman

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