FCC chairman backs T-Mobile, Sprint merger

A T-Mobile and Sprint store sit side-by-side in a strip mall on April 30, 2018 in El Cerrito, California.
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The chairman of the Federal Communications Commission says he plans to recommend the agency approve the $26.5 billion merger of wireless carriers T-Mobile US and Sprint, saying it'll speed up 5G deployment in the U.S.

FCC Chairman Ajit Pai also said Monday that the combination will help bring faster mobile broadband to rural Americans.

"Two of the FCC's top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the next generation of wireless connectivity. The commitments made today by T-Mobile and Sprint would substantially advance each of these critical objectives," he said in a statement.

T-Mobile and Sprint mega merger in limbo
T-Mobile and Sprint mega merger in limbo

Pai said the companies have committed to deploying a 5G network that would cover 97% of the U.S. population within three years of the closing of the merger and 99% of Americans within six years. In addition, 85% of rural Americans would be covered within three years and 90% covered within six years. T-Mobile and Sprint also guaranteed that 90% of Americans would have access to mobile broadband service at speeds of at least 100 Mbps and 99% would have access to speeds of at least 50 Mbps.

Pai said T-Mobile US Inc. and Sprint Corp. would suffer "serious consequences" if they don't meet their FCC commitments, including the possibility of having to pay billions to the Treasury Department.

Both the FCC and Justice Department must approve the deal. The companies argue that the combination will lead to better "5G" service, the next generation of wireless. They've also promised to create U.S. jobs and say they will compete with cable companies as well as Verizon and AT&T. Public-interest and labor groups have raised concerns about wireless price increases and job cuts.

The Obama administration rebuffed the companies' earlier effort to merge, as well as an attempted deal between AT&T and T-Mobile, on concerns that such deals would hurt competition in the wireless industry.

Shares of T-Mobile jumped nearly 7 percent in early trading, while Sprint's stock soared 27 percent.