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California regulators to T-Mobile: Now wait just a minute

T-Mobile announced Wednesday that it closed its merger with Sprint. But some telecom regulators in California aren't so sure about that.

"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," the California Public Utilities Commission tweeted late Wednesday. The agency cited a document from CPUC Commissioner Clifford Rechtschaffen stating that Sprint and T-Mobile "shall not begin merger of their California operations until after the CPUC issues a final decision on the pending applications."

T-Mobile on Wednesday morning told Light Reading that it has communicated with the CPUC about its position and that there is "no longer any need for CPUC approval." The company added, though, that it will continue working with the commission to conclude the review proceeding on April 16.

T-Mobile did not immediately respond Thursday to questions about the CPUC's latest statement.

However, in its Wednesday morning press release about the close of the merger, T-Mobile warned of litigation that "may arise from T-Mobile's consummation of the business combination during the pendency of the California Public Utility Commission's review of the business combination."

Steve Blum of Tellus Venture Associates has been closely tracking T-Mobile's proceedings at the CPUC. In a blog post Thursday, he explained that T-Mobile's lawyers are essentially arguing that the company can close its merger without express CPUC approval, but that the CPUC's Rechtschaffen "is unconvinced, to say the least."

Rechtschaffen was appointed to the CPUC by former California Gov. Jerry Brown in January 2017; he previously served as Brown's senior advisor on climate, energy and environmental issues.

The CPUC is the only regulatory agency – either state or federal – that hasn't signed off on the merger. The merger was first announced almost two years ago, but the terms of the transaction changed in the summer of last year when Dish Network essentially agreed to replace Sprint as the nation's fourth major wireless network provider, under an agreement with the US Department of Justice.

A group of state attorneys general, including California's Xavier Becerra, had opposed the merger until a federal judge struck down their lawsuit. Becerra withdrew his opposition to the transaction last month.

Tellus' Blum warns that the issue likely will be resolved in court. "What is certain to follow, though, is litigation. T-Mobile says its mobile business isn't governed by California law. Rechtschaffen says it is, and it's a good bet his fellow commissioners agree. That dispute will have to be settled in a federal court," he wrote.

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

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