U.S. Justice Department officials reportedly want T-Mobile US Inc. and Sprint Corp. to lay the groundwork for a new wireless carrier that will have its own network, in order to clear the proposed $26.5 billion merger.
The two companies have been pondering additional concessions that could help win Justice Department approval for their deal, according Bloomberg's unnamed sources. But spinning off a full-fledged national competitor would be dificult for T-Mobile and Sprint to agree.
The Sprint acquisition would consolidate the U.S. wireless market to three national players.
The biggest concern surrounding the T-Mobile/Sprint merger was it would reduce the number of national carriers from four to three, hindering competition. But the companies have argued that their deal would create a stronger No. 3 to market leaders Verizon Communications Inc. and AT&T Inc.
The deal has been supported by the Federal Communications Commission. FCC Chairman Ajit Pai last week said he’ll recommend that his agency approve the merger on the condition that the companies sell Sprint’s Boost prepaid brand, build an advanced 5G network over three years, and pledge not to raise prices while the network is being constructed.
While the FCC and the Justice Department typically work closely together in reviewing mergers, they base their decisions on different standards.
In 2014, the DoJ rejected a propposed by Sprint and T-Mobile to merge. And it sued to block AT&T’s bid in 2011 to take over T-Mobile, saying the U.S. mobile market needs a strong fourth rival.