A rumored potential merger of the nation’s number three and number four wireless carriers appears unlikely to pass regulatory scrutiny based on an informal poll that included three former FCC chairmen and other former FCC officials.
Financial research firm Moffett Nathanson Research conducted the survey of what it called an “extraordinarily august group” of respondents after the Wall Street Journal reported Friday that Sprint was considering purchasing T-Mobile. In addition to the former FCC people, respondents also included telecom and antitrust attorneys, telecom lobbyists not directly involved with the carriers, regulatory academics and antitrust scholars.
“The preponderance of respondents put the probability of success at below 50%,” the researchers wrote. “But it was by no means an overwhelming or definitive majority.”
Respondent comments tended to fall into six categories – including two reasons why the merger might be approved and four reasons why it was unlikely to be approved, said Moffett Nathanson.
Reasons for approval included:
- A combined Sprint/T-Mobile would be better able to counter-balance the nation’s two largest wireless carriers AT&T and Verizon
- Before his approval as FCC chairman, Tom Wheeler wrote a blog post suggesting that it might have been better to approve the AT&T/T-Mobile merger with conditions than to reject it
Reasons against approval were:
- The FCC and the Justice Department have said they want four national mobile competitors
- The market has become more competitive as T-Mobile and Sprint both have become stronger
- The combined T-Mobile/Sprint would own an average of 291 MHz of spectrum in the nation’s top 100 markets – more than twice as much as Verizon or AT&T
- A decision to approve such a merger would cause key decision-makers – including Wheeler and DOJ leaders — to lose face.
Moffett Nathanson also note that the wireless industry’s Herfindahl-Hirschman Index would rise 430 points to 3,151 – higher than the 3,109 score that the AT&T/T-Mobile merger would have yielded.
“The FTC and DOJ define a ‘highly concentrated market’ as one with an HHI in excess of 2,500,” the researchers wrote.