T-Mobile’s John Legere Promises Rates Won’t Increase If the Sprint Merger Gets Approved
T-Mobile CEO John Legere vowed on Monday not to raise prices on the mobile rate plans it currently offers for three years if federal regulators allow his company to merge with rival Sprint.
“New T-Mobile will make available the same or better rate plans for our services as those offered today by T-Mobile or Sprint,” Legere wrote in a brief letter to Federal Communications Commission chairman Ajit Pai. “We believe this merger makes consumers better off, and we’re willing to put our money where our mouth is. Period.”
The FCC and the Department of Justice, along with some state utility regulators, must approve the deal that would combine the third and fourth largest wireless players. T-Mobile and Sprint have said that by bulking up they would be able to roll out new 5G networks more quickly and compete better with top rivals Verizon and AT&T. But critics fear reduced competition will lead to higher prices and fewer choices for consumers.
Legere’s letter to Pai, and an accompanying four-page filing laying out details of the promise to the FCC, came as the agency renewed its review of the proposed merger announced after being interrupted by the partial government shutdown. T-Mobile has been by far the fastest growing wireless carrier in recent years, but ended 2018 with just under 80 million customers, trailing AT&T (T) and Verizon (VZ), which reported 153 million and 118 million subscribers, respectively. Sprint trailed with 54 million.
In its more detailed proposal, T-Mobile (TMUS) said it might raise prices under some circumstances it termed “not within the control” of the merged company. Such situations included potentially raising prices to pass through increased costs from taxes, fees and surcharges, or costs for services from third parties. Although not mentioned specifically in the filing, T-Mobile offers its unlimited customers free Netflix (NFLX) accounts, for example, but Netflix recently raised its prices. With those caveats, T-Mobile said it would not object to being held to the three-year price guarantee as a formal condition of the FCC approving the merger.
Opponents argued that the conditions made the pricing promise worthless, however.
“The company’s pledge is riddled with loopholes and ensures that any network improvements will allow them to justify higher monthly bills, effectively rendering the pledge meaningless,” a group known as the 4Competition Coalition noted in a statement. “Today’s news makes clear that T-Mobile knows that its merger is in trouble. Their response—inviting government agencies to regulate their behavior—seeks to impose precisely the kind of behavioral conditions that regulators have found insufficient in merger reviews.”
The 4Competition group includes some telecom unions like the Communications Workers of America, which fear job losses from the merger, as well as more direct rivals like Dish Network (DISH) and Cspire.
Shares of T-Mobile, which have risen 9% over the past year, gained 1% in after hours trading. Sprint’s (S) stock price, up 16% over the past year, was unchanged.