Enlarge /. California calls on T-Mobile and Sprint to end the merger.
Getty Images | Stefan Jackowski | EyeEm
California regulators are trying to stop the merger of T-Mobile and Sprint. The companies have not yet received approval to merge their activities in the US state.
T-Mobile and Sprint announced yesterday that the merger is complete and the two companies are now one. Although the companies had almost all government agency approvals, they have not yet received the expected approval from the California Public Utilities Commission (CPUC). The CPUC is scheduled to vote on April 16 on the merger's approval and related terms.
In response to T-Mobile / Sprint's announcement yesterday, the CPUC issued a decision that the companies "should only begin merging their California operations after the CPUC has made a final decision on pending applications."
We contacted T-Mobile today about yesterday's CPUC ruling and will update this article when we get a response.
The State Public Utilities Code prevents companies from merging their California activities without permission, the CPUC regulation says. "Both joint applicants, T-Mobile and Sprint, have California subsidiaries that are state utilities and are under the jurisdiction of that agency. The merger of the California businesses is therefore subject to CPUC approval." the command said.
However, T-Mobile and Sprint argue that the CPUC is not responsible for wireless transactions and that the merger can be completed without the agency's approval. T-Mobile and Sprint previously received approval from the Federal Communications Commission and the Department of Justice and defeated a lawsuit from California and other states that tried to block the deal.
The merger takes place regardless of the result at CPUC. However, the dispute between the companies and the Golden State could lead to litigation and affect whether the State is able to impose conditions on the business. T-Mobile claimed that some of the conditions planned by CPUC were "practically impossible" and "unfair and discriminatory towards T-Mobile against our competitors".
T-Mobile warned investors that there is a "risk of litigation or regulatory action" arising from T-Mobile's completion of the business combination during the upcoming California Public Utility Commission review of the business combination.
The legal arguments
Steve Blum of Tellus Venture Associates followed the dispute and said that "T-Mobile and Sprint have asked to withdraw their request for the California Public Utilities Commission to approve the wired elements of their merger agreement." Sprint informed the state regulator that "services in California are no longer being offered as regulated public utilities" after completing a year-long process of migrating old phone systems to the Voice over Internet protocol, which is not regulated in the same way . Sprint said it is doing away with the certificate of public convenience and necessity that it had previously received from CPUC.
Sprint's wired services are aimed exclusively at corporate and carrier customers and not at private users.
The Californian utility's responsibility for the transmission of landlines is clear, but "the authority of the CPUC over a cellular operator is murky at best" because "cellular communications licenses are issued by the Federal Communications Commission that approved the transmission," wrote Blum.
To support its jurisdiction, the CPUC says that "cellular operators & # 39; telephone companies & # 39; are therefore public utilities under sections 216, 233 and 234 of the Public Utilities Code." Although the CPUC recognizes that states cannot regulate cellphone fees, states that states "still retain responsibility for" other conditions "of the cellphone service."
Back and forth
T-Mobile informed the CPUC in a letter on Tuesday that the agency "is not responsible for this transaction". T-Mobile and Sprint also said that they could not wait any longer because the pandemic "created unprecedented uncertainty and risk in the financial markets" and "there is no assurance that banks will be able to continue financing the transaction if it closes further delayed. "
T-Mobile and Sprint have extended their objections to the responsibility of the CPUC and the proposed terms in a longer filing. The 5C expansion requirements proposed by the CPUC go beyond the FCC terms, the companies said. Another requirement proposed by the CPUC that companies "must offer in-home broadband wherever 5G services are available" is "incompatible" with T-Mobiles "undisputed evidence that in-home broadband is only available sufficient network capacity is provided "(sometimes referred to as" overcapacity "), the filing said.
T-Mobile and Sprint also rejected the proposed requirements to "maintain LTE speeds and coverage areas in California" until the 4G LTE network is decommissioned, as well as the proposed 72-hour emergency power requirements. They also declined to create 1,000 full-time jobs in California and expand the availability of discount services for low-income people.