T-Mobile and Sprint are speaking President Donald Trump’s language.
The two companies are pitching their merger as a pro-consumer deal that will create domestic jobs and help America compete with China’s wireless industry. Leaders of the two companies said so on a conference call tied to Sunday’s announcement of the merger. T-Mobile CEO John Legere, who has been tapped to lead the combined company, also gave Trump a shout-out when saying that tax reform helped the merger deal get off the ground.
Whether or not that rhetoric was intentionally crafted to sway the Trump administration, it does speak to the federal government’s priorities. Trump has promised to grow America’s workforce and warned that China’s growing economy threatens U.S. industry. T-Mobile and Sprint will need approval from Trump’s Federal Communications Commission and Department of Justice to complete the deal, which would create a combined company, under the T-Mobile name, worth $146 billion.
T-Mobile and Sprint are pitching the merger as a way for the U.S. to compete with other countries in 5G technology. 5G stands for “fifth generation” wireless technology that provides speed on mobile devices comparable to high-speed home internet.
“Right now, China has a lead on the United States in moving towards leadership in 5G,” Legere said on the call Sunday. “Korea has a lead. That can’t happen … we need to respond together in order to provide that for this country and we think we can drag the rest of the players kicking and screaming to the prize, which is American leadership in 5G.”
The two companies also credited the Trump administration’s tax overhaul with making the deal possible. The newly enacted Tax Cuts and Jobs Act reduces the corporate tax rate to 21 percent. T-Mobile CFO Braxton Carter said that the reduction in taxes will provide the companies with the funds they need to integrate and “help position the company to compete very aggressively, resulting in lower prices for consumers,” on the call Sunday.
Legere echoed Braxton’s comments, claiming that “Trump-led tax reform” helped the deal finally come together after several failed attempts in years past.
Some elected officials, including Sen. Amy Klobuchar, D.-Minnesota, have already expressed skepticism about a merger that would reduce the U.S. wireless industry to three major players.
Competition among the 4 mobile carriers has led to lower prices, better services & more innovation. That’s why the announcement that T-Mobile & Sprint plan to merge raises serious antitrust issues. We need to make sure the benefits that competition brings to consumers continue.
— Amy Klobuchar (@amyklobuchar) April 30, 2018
Others, like Washington Gov. Jay Inslee, also a Democrat, appear to be drinking the magenta and yellow Kool-Aid.
WA continues its leadership in wireless telecom today with news that @TMobile is growing tech jobs in our state through proposed merger with Sprint. We’ll look forward to hearing more details regarding rural broadband and consumer choices. https://t.co/GoEAr8U9Ay
— Governor Jay Inslee (@GovInslee) April 29, 2018
The companies together would have about 127 million total retail and wholesale customers, compared with AT&T at 141 million and Verizon at 150 million, according to Strategy Analytics data reported by Fierce Wireless. T-Mobile’s Bellevue, Wash., base will serve as the headquarters for the combined company, with a second HQ in Sprint’s home of Overland Park, Kan.
Federal review of the deal could take a while but T-Mobile and Sprint say they expect it to close by the first half of 2019. It could be an uphill battle; similar deals between telecom companies, including T-Mobile, have fallen apart in the past due to regulatory hurdles. But the two companies are confident they can convince the Trump administration that their merger isn’t anti-competitive.
“We believe that the merits of this transaction will be judged in an entirely different way,” Legere said on the call. “This is about taking America’s rightful spot in the 5G evolution cycle. It’s about super-charging the work that T-Mobile and Sprint have already done. It’s about job creation and I would say going in … this transaction should not be thought about on traditional lines.”