Yesterday T-Mobile and Sprint announced that they had completed their merger, but the deal still hasn’t gotten official approval from the California Public Utilities Commission, the final hurdle it needs to clear before it can officially merge. Now the CPUC has something to say about that.
The CPUC has issued an order saying that T-Mobile and Sprint cannot begin the merger of their California operations until it makes its final decision on the application. The CPUC issued a proposal to approve the merger earlier this month, but it won’t officially vote on the matter until April 16th.
Here’s what the CPUC had to say in response to T-Mobile and Sprint announcing their merger’s completion yesterday:
“Public Utilities Code Section 854(a) states in relevant part that “[n]o person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control … either directly or indirectly, any public utility organized and doing business in this state without first securing authorization to do so from the commission.” Both Joint Applicants, T-Mobile and Sprint, have California subsidiaries that are public utility telephone corporations under state law, and subject to the jurisdiction of this agency.
“The merger of the companies’ operations in California is therefore subject to CPUC approval. Accordingly, Joint Applicants shall not begin merger of their California operations until after the CPUC issues a final decision on the pending applications.”
I’ve reached out to T-Mobile for a response to the CPUC’s order but have not yet received a response.
Tellus Venture Associates’ Steve Blum shared a letter from T-Mobile CEO Mike Sievert to CPUC Commissioner Clifford Rechtschaffen from March 31st that says that T-Mo planned to go ahead with the merger despite not having the CPUC’s official blessing. In it, Sievert explains that an April 1st closure is necessary because of the uncertainty in financial markets related to the coronavirus pandemic and T-Mo’s need for financing to complete the deal.
Additionally, Sievert argues that closing the merger now will provide certainty to T-Mobile and Sprint’s customers and employees and that an April 1st close is necessary for accounting and financial reporting needs. Finally, the new T-Mo CEO says that he has the view that “the Commission lacks jurisdiction over this transaction” and that T-Mobile believes that the FCC has exclusive authority to approve wireless deals.
Blum suggests that this situation could lead to a dispute in federal court.
Yesterday was a big deal for T-Mobile and Sprint as they celebrated the completion of their merger two years after it was first announced, but now it looks like T-Mo may have a little more work to do before its merger is officially complete. It’ll definitely be interesting to see how this situation plays out, so stay tuned.
We issued an order today that makes clear that @Sprint and @TMobile cannot begin the merger of their California operations until after the CPUC issues a final decision on the pending application, scheduled for the April 16 Voting Meeting. https://t.co/vNQGkd8n3a pic.twitter.com/SgoO93Ntnq
— California PUC (@californiapuc) April 2, 2020