T-Mobile reportedly reaches settlement with California AG on Sprint merger

According to two separate sources, T-Mobile has reached an agreement with California's attorney general regarding its proposal to merge with Sprint. The California AG has stood as a leading opponent to the deal.

The Wall Street analysts at New Street Research and Politico Pro reporter Leah Nylen both reported that the agreement would be announced later Wednesday.

Officials from T-Mobile and the California attorney general did not immediately respond to questions from Light Reading on the topic.

In a brief note issued to investors Wednesday morning, the New Street Research analysts wrote that California and roughly a dozen other states will drop their opposition to the proposed merger of T-Mobile and Sprint under the new deal. They had filed a lawsuit seeking to block the merger, though a judge ruled against them earlier this year. Under the new deal that will reportedly be announced, the states will agree not to pursue an appeal of that verdict.

In return, according to the analysts at New Street Research, T-Mobile will agree to several new conditions including a "$10 billion commitment that will deliver free internet access over the next five years and another $700 million commitment in hardware to 10 million households. Eligible families in the U.S. and Puerto Rico will receive up to 100GB of FREE internet access each year, one FREE Mobile Wi-Fi enabled hotspot and the option to purchase select Wi-Fi enabled devices at the company's cost."

Other conditions could include low-cost plans for low-income families, and potentially commitments to provide services for first responders.

If the agreement is indeed announced, it would line up with a proposal that T-Mobile floated in November, but would essentially codify the terms into a legally binding deal. In order to secure support from other attorneys general around the country, T-Mobile has already agreed to similar conditions with such states as Colorado and Mississippi.

While the agreement with the California AG is undoubtedly a win for T-Mobile, it's unclear how it might affect the California Public Utilities Commission. The CPUC is the only state utilities agency still evaluating the proposed merger, and has said it would discuss the merger on April 16.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

Mike Dano 3/11/2020 | 1:15:31 PM
Update The settlement has been announced, and contains many of the conditions that New Street Research predicted, including:
  • Make low-cost plans available in California for at least 5 years, including a plan offering 2 GB of high-speed data at $15 per month and 5 GB of high speed data at $25 per month;
  • Extend for at least an additional two years the rate plans offered by T-Mobile pursuant to its earlier FCC commitment, ensuring Californians can retain T-Mobile plans held in February 2019 for a total of five years;
  • Offer 100 GB of no-cost broadband internet service per year for five years and a free mobile Wi-Fi hotspot device to 10 million qualifying low-income households not currently connected to broadband nationwide, as well as the option to purchase select Wi-Fi enabled tablets at the company's cost for each qualifying household;
  • Protect California jobs by offering all California T-Mobile and Sprint retail employees in good standing an offer of substantially similar employment. T-Mobile also commits that three years after the closing date, the total number of new T-Mobile employees will be equal to or greater than the total number of employees of the unmerged Sprint and T-Mobile companies;
  • Create approximately 1,000 new jobs in California with a customer service center in Kingsburg;
  • Increase diversity by increasing the participation rate in its employee Diversity and Inclusion program to 60 percent participation within three years; and
  • Reimburse California and other coalition states up to $15 million for the costs of the investigation and litigation challenging the merger.

Details are available on the California attorney general's website.
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