Are California regulators a potential obstacle to T-Mobile/Sprint?

According to the Wall Street Journal, T-Mobile and Sprint are waiting for a federal judge to rule on whether they can merge, but the companies now face another hurdle, the California Public Utilities Commission.

The state utilities overseer is the only such body that hasn’t yet blessed the $26 billion deal, and its continuing review threatens to further delay a merger that has dragged on for nearly two years. The state body has until July to vote but might extend that timeline further.

Just how much power the California Public Utilities Commission and other state bodies like it wield is unclear. Neither company is based in California but, as nationwide wireless providers, they have millions of customers in the state, and Sprint has a small wireline business there. Most other state utility commissions have approved the deal.A spokesman for the commission said the review was continuing. Representatives for Sprint and T-Mobile declined to comment.

Disapproval by a state public-utility commission could be enough to stop a communications merger, consultants at NERA Economic Consulting wrote in a 2017 paper that analyzed state reviews of 40 such transactions. The paper found that California, New York and West Virginia historically have the most active utilities commissions when it comes to reviewing communications mergers. 

Other legal experts said that while the California commission could demand further concessions from the carriers and delay the deal’s close, it was unlikely to scuttle the transaction. It was more common for utilities commissions to block energy deals involving local businesses than to block telecommunications transactions, they said, because the latter involve wireless service sold nationally.

Full Content: Wall Street Journal

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