Sprint and T-Mobile merger takes giant step toward approval [Updated]

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FCC chairman Ajit Pai isn’t down with China Mobile coming to the United States.
FCC chairman Ajit Pai says its OK for there to be three nationwide carriers instead of four.
Photo: Gage Skidmore/Flickr CC

Your iPhone may soon have one less option for wireless service. The Chairman of the Federal Communications Commission has signed off on the merger of Sprint and T-Mobile. This is a significant step toward the third and fourth largest U.S. carriers becoming one.

Update: An unconfirmed report indicates that the Justice Department might nix this merger.

Chairman Ajit Pai said this morning that he’ll recommend that the other four members of the FCC vote for the merger, according to Reuters. An FCC vote on the plan has not yet been scheduled, and Pai’s approval doesn’t mean the Commissioners will rubber stamp his decision.

The Chairman required T-Mobile to promise to sell off Boost Mobile on order to get his approval, something the carrier quickly committed to do.

Sprint’s stock jumped 23 percent on this news, while T-Mobile’s share price is up about 5 percent.

The Sprint/T-Mobile merger also requires the approval of the U.S. Justice Department. The head of the this agency’s Antitrust Division said recently he hadn’t decided yet whether to approve the deal.  However, Bloomberg is reporting being told by an unnamed source that the Justice Dept. remains concerned that cutting the number of nationwide carriers down to two would hurt competition in the wireless market.

Sprint and T-Mobile working hard to sell their merger

Megamergers typically lead to higher costs for consumers and significant layoffs, but Sprint and T-Mobile have been promising the opposite.

One of the advantages of bringing these two together would be to make the combination a stronger competitor for Verizon and AT&T. The merged company would have approximately 130 million subscribers, while AT&T has around 140 million and Verizon roughly 150 million.

Plus, the two smaller carriers would be able to combine their wireless spectrum, helping them build a better 5G network.

The combination will be called T-Mobile, and will be headed by John Legere, T-Mobile’s current CEO. Assuming their merger goes through, of course.