When it comes to T-Mobile and Sprint, President Trump’s top regulators may be more closely aligned than previously thought.
Before making this week’s surprise announcement that he supported the controversial, $26 billion merger between the telecom giants, Ajit Pai, chairman of the Federal Communications Commission, “consulted” with Makan Delrahim, the head of the antitrust division at the Department of Justice, sources told The Post.
Details of the conversation between Pai and Delrahim couldn’t immediately be learned. But the fact that the pair were speaking ahead of Pai’s bombshell is a signal that Delrahim may be poised to overrule a recommendation from the DOJ’s staff to block the deal, according to sources.
“I do think it signals that the merger is going to happen,” said David Scharf, vice chairman at New York law firm Morrison Cohen, whom Trump once considered for a senior DOJ position.
If Pai and Delrahim did speak before Pai’s announcement, “That information confirms that the DOJ feels there is a negotiable transaction,” Scharf said.
Both the FCC and the DOJ must approve the tie-up, which would cut the number of players in the US telecom industry to three from four, with Verizon and AT&T poised to keep the No. 1 and No. 2 spots, respectively.
Critics have accused Delrahim of acting on the wishes of the Oval Office, citing as an example the DOJ’s failed lawsuit to stop the AT&T-Time Warner merger. Scharf notes that the White House seems pleased with the concessions T-Mobile has offered to gain FCC approval of the merger.
T-Mobile’s key promise is to roll out 5G wireless service to 97 percent of the country within three years — a goal that should sit well with Trump’s rural voters.
Consumer advocates fret that the deal will squelch competition for US wireless customers, who already pay significantly higher rates than consumers in Europe’s more fragmented telecom sector. Proponents, including Pai, have cited the importance of an accelerated 5G rollout.
According to sources, DOJ staff hasn’t relented in its opposition to the deal, arguing that it’s anticompetitive. T-Mobile, meanwhile, hasn’t offered any fresh concessions to regulators in the past few months, according to one source close to the talks.
That includes T-Mobile’s agreement to sell Sprint’s lower-priced, prepaid wireless service Boost Mobile — a concession that was revealed earlier this week.
Nevertheless, whether the DOJ files a lawsuit to block the merger is ultimately Delrahim’s decision.
It’s still possible, sources said, that Delrahim will extract additional concessions in exchange for his final OK. His staff, in particular, has been pushing to cap the combined company’s wireless prices for as long as seven years instead of the three that got blessed by the FCC.
Delrahim has voiced his distaste for such “behavioral remedies,” which would require regulatory oversight, instead favoring “structural” remedies that force the sale of assets. But the FCC’s expected approval with conditions — including the 5G rollout at the three-year price cap — will relieve the DOJ of those enforcement duties, instead leaving them with the FCC.
“It will be hard for Makan to argue this will have a bad impact on competition when the FCC enforces these conditions,” a source working with T-Mobile and Sprint said. “The DOJ will clear this unconditionally.”
Sprint shares in morning trading were at $6.99. If the merger is approved, Sprint shareholders would receive $7.80.
A DOJ spokesman declined comment.