August 20, 2018 / 11:09 AM / 3 months ago

T-Mobile runs behind-the-scenes PR push to support Sprint deal

(Reuters) - T-Mobile US Inc (TMUS.O) is asking smaller wireless operators that piggyback off its network to issue public statements or even write newspaper editorials to help persuade antitrust regulators to approve its proposed $26 billion acquisition of Sprint Corp (S.N).

FILE PHOTO: A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

The merger, under review by the Federal Communications Commission and the Department of Justice, would shrink the wireless market to three big players from four.

The FCC is collecting public comments and formal petitions to oppose the deal until Aug. 27. Reuters previously reported that the U.S. Department of Justice was soliciting opinions of the deal from so-called mobile virtual network operators.

Opponents of the merger argue it could raise prices for the wireless companies whose customers use T-Mobile and Sprint’s networks.

One wireless operator that works with T-Mobile said it received an email with suggestions on how to support the deal. The company declined to be named because it has concerns about how it would be affected in the merger.

The email from T-Mobile, seen by Reuters, suggested the company write an op-ed supportive of the deal or submit a letter of support to regulators. The email also offered talking points the company could use during media interviews, such as how the merger between the No. 3 and 4 U.S. carriers would help the build-out of a 5G network.

John Marick, chief executive of Consumer Cellular, a wireless company that sells inexpensive phone plans and devices to people over the age of 50, said he received an email from T-Mobile asking if he was willing to submit a comment to the FCC. Consumer Cellular operates off of T-Mobile and AT&T’s network.

Marick said he has not yet submitted a comment and is not opposed to doing so, adding he did not view the email as pressure to issue a comment.

While it is not unheard of for companies pursuing mergers to ask vendors or customers for support, there could be a small amount of coercion going on, given that some of the smaller wireless companies have direct relationships with T-Mobile, said James Cox, a Duke Law School professor who specializes in corporate and securities law.

T-Mobile, which is majority-owned by Germany’s Deutsche Telekom (DTEGn.DE), and Sprint, majority-owned by Japan’s SoftBank Group (9984.T), declined to comment. Both companies have previously said they expect the deal to win regulatory approval.

Consumer Cellular and other smaller wireless companies operate by purchasing access to the four major U.S. carriers’ networks at wholesale rates, and often market their phone plans to specific users, such as low-income groups or minorities.

Earlier this month, a source told Reuters that U.S. antitrust enforcers are in the early stages of reviewing the merger and have reached no conclusions on how many wireless carriers the country needs.

The Obama administration had previously taken actions to keep four wireless carriers in the United States to ensure enough competition.

T-Mobile and Sprint have argued, however, they need to combine to more quickly build a 5G network, as countries like China and South Korea are currently ahead of the United States in 5G investment.

Reporting by Sheila Dang

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