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Telecommunication

FCC chairman circulates order to approve Sprint and T-Mobile tie-up

Merger still faces court challenge from 16 state attorneys general

T-Mobile CEO John Legere, right, and Sprint CEO Marcelo Claure pose for pictures on the floor of the New York Stock Exchange in New York in April 2018. FCC Chairman Ajit Pai drafted an order to approve the merger of the two carrier giants.    © Reuters

WASHINGTON (Reuters) -- U.S. Federal Communications Commission Chairman Ajit Pai on Wednesday circulated a draft order that would grant approval to the $26 billion tie-up of T-Mobile Us Inc and Sprint Corp.

"The evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas," Pai said in a statement.

The order must still be approved by two of the other four FCC commissioners. The U.S. Justice Department approved the merger last month, but the deal still faces a court challenge from 16 state attorneys general. A trial is set for Dec. 9 on the legal challenge by the states.

The lengthy draft FCC order has not been made public.

In May, Pai came out in favor of the deal after the companies offered concessions, including selling Sprint’s Boost Mobile prepaid cellphone service, as did FCC Commissioner Brendan Carr, a Republican. The panel’s third Republican, Mike O’Rielly, said in May he was "inclined to support" the proposed merger.

On Wednesday, Democratic FCC Commissioner Jessica Rosenworcel wrote on Twitter she was "not convinced that removing a competitor will lead to better outcomes for consumers" and said the public should be able to comment before the commissioners vote.

The third- and fourth-largest U.S. wireless companies have agreed to divest Sprint’s prepaid businesses to satellite television company Dish Network Corp to create a fourth U.S. wireless carrier. Critics, including some state attorneys general, say competition will not increase and prices for mobile phone plans will rise.

T-Mobile USA Chief Executive John Legere wrote on Twitter the order was "another milestone toward bringing #NewTMobile and #5GForAll to life for US consumers!"

Advocacy group Free Press research director S. Derek Turner questioned Pai's decision to back the merger before a formal order had been drafted.

"Given the harmful impacts of this merger and the shady manner in which the FCC’s approval was reached behind closed doors, the public should have the opportunity to weigh in and comment before the full agency vote is final," Turner said in a statement.

Assistant Attorney General Makan Delrahim praised Pai's announcement. "We are now one step closer to strengthening competition for high-quality 5G networks that will benefit American consumers nationwide," he said in a statement.

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