FCC may approve T-Mobile-MetroPCS deal without voting: report
It is possible that the FCC may approve the merger of Deutsche Telekom AG (DTE)'s T-Mobile USA unit with MetroPCS Communications Inc. (PCS) without bringing the matter to vote, according to reports.
The U.S. Federal Communications Commission (FCC) may decide to approve or reject the proposed merger "at the bureau level instead of the commission level," according a filing submitted to the agency by an attorney for the Communications Workers of America (CWA), Monica Desai. According to Bloomberg, the deal — which has the potential to affect employees and result in significant job cuts, has been met with opposition by labor groups.
Union officials met with the FCC this week, and talks appear to indicate that the deal will go ahead. By taking on MetroPCS, the U.S.'s fifth-largest wireless carrier, T-Mobile USA — currently the fourth largest — would gain both additional subscribers and spectrum capacity, which would boost its position in relation to rival firms including Sprint Nextel and Verizon.
It is hoped that the merger will help the carrier not only compete with rival firms, but also bolster its financial position. In Q3, the firm's revenue slid to $4.9 billion, a drop of six percent year-on-year, and perhaps of more concern, lost over half a million post-paid contracts.
However, if the deal goes ahead, T-Mobile plans to begin wielding the staff axe. Unions have warned that job cuts are inevitable, and considering the fact that T-Mobile cut over 4,000 employees last year alone, the past is likely to repeat itself. The FCC has been asked by Congress to ensure that the deal does not result in job losses, but the facts and usual result of such deals points in the other direction, combined with the possibility of a bureau-level decision.
Debbie Goldman, telecommunications policy director for the CWA, told the publication:
"This is outrageous. It's unprecedented that a deal that is this big and has raised controversies about its employment impacts would not be voted on by the full commission."
Although the CWA has not opposed the deal, restrictions requested by Congress imposition seem less likely to make an appearance with a decision taken at bureau-level. The Communications Workers believe that a "significant" number of jobs will be cut, according to the filing.
The FCC must approve the deal before it is allowed to go ahead in addition with the Committee on Foreign Investments (CFIUS) and MetroPCS shareholders, who will vote on the deal in April this year. Once MetroPCS shareholders are granted $1.5 billion in cash, Deutsche Telekom will own 74 percent of the business.
Wireless carriers are all competing heavily for both spectrum allowances — which allow the networks to support additional customers and offer better speeds and services — as well as jostling for extra subscribers. Recently, through the intended acquisition of a large stake by Japanese carrier Softbank in Sprint, the company made its intentions clear that the carrier wishes to acquire additional shares in broadband provider Clearwire, which would grant the struggling firm more subscribers and spectrum resources.