WASHINGTON — When T-Mobile announced its intention to buy Sprint last April, the prospects for the $26 billion deal winning regulatory approval appeared strong. Although a similar deal had been effectively blocked a few years earlier, Trump administration officials voiced far less concern.
But the merger has faced harsher scrutiny in recent weeks, as Democratic lawmakers, empowered by their House majority, have amplified their criticism of the deal.
The Democrats, as well as consumer advocates, say that combining the two companies would probably lead to higher prices and job cuts. The deal would reshape the wireless industry, combining the country’s third- and fourth-largest wireless providers, with over 100 million subscribers, just as a new generation of cellular technology comes to market.
The lawmakers have also raised concerns about the companies’ lobbying blitz over the last 10 months, focusing on dozens of stays by executives at the Trump International Hotel in Washington. Some lawmakers have suggested that the companies were trying to buy favor with the Trump administration.
The lawmakers’ criticisms will take center stage at two congressional hearings this week, when John Legere, T-Mobile’s chief executive, and Marcelo Claure, Sprint’s executive chairman, are expected to face tough questioning.
The hearings, on Wednesday before the House Committee on Energy and Commerce and then on Thursday before the House Committee on the Judiciary, will not have a direct influence on the government’s regulatory review. Approval for telecommunications mergers comes from the Justice Department and the Federal Communications Commission, which are close to completing their own independent investigations of the deal. Leaders of the agencies were appointed by President Trump.
The Justice Department and the F.C.C. declined to comment for this article, as did the companies. Mr. Legere said last week during a call with investors that he believed the deal was still on track, and that he expected it to be completed by June.
But a congressional hearing so late in the review process can add pressure on the agencies, or uncover new information that extends investigations. Aiming to allay concerns by lawmakers and regulators, the companies promised last week that they would not raise prices for at least three years after the merger was complete.
The sudden concession raised some questions about whether the merger was in trouble.
“It can’t be seen as good news for the deal’s prospects,” Craig Moffett, an analyst at MoffettNathanson, an investment research firm, wrote late last week.
The biggest concern by many Democrats is the potential harm to consumers from the merger. Regulators during the Obama administration were adamant that the nation needed four big nationwide wireless carriers to keep prices from rising too quickly, and to pressure carriers to deploy better and faster services. They often pointed to T-Mobile’s innovative deals for consumers as evidence that it provided beneficial competition to the top two wireless carriers, Verizon and AT&T.
“We need to understand how the merging of two of the four largest wireless carriers will affect consumer prices, American workers and competition,” Representative Frank Pallone Jr. of New Jersey, the Democratic chairman of the Energy and Commerce Committee, said in a statement. “We also want to make sure that the F.C.C. puts consumers first as it reviews whether this merger is in the public interest.”
Regulators appointed by Mr. Trump, as well as Republican lawmakers, have not taken a similar stand. The president has made the advancement of 5G wireless technology, the next generation of mobile broadband networks, a national priority. He has pointed to China’s lead on 5G as a national security threat, because the technology will be used to run advanced robotics and technologies like driverless cars.
T-Mobile and Sprint have pitched their merger as a way for the United States to advance 5G technology, particularly to rural areas that cable services don’t reach. They say that by combining resources, they will be able to invest more heavily and quickly in the newest wireless technologies and bring them to market faster.
Since the moment the deal was announced last year, the companies have tried to sell the deal to Washington officials with an aggressive charm offensive. Mr. Legere has made numerous visits to the F.C.C. and the Justice Department in the past year and has documented many of his visits on social media. One month after the merger was announced, Mr. Claure of Sprint acted as co-host of a fund-raiser for Representative Marsha Blackburn, a prominent Republican lawmaker from Tennessee running for the Senate, who has long supported issues favorable for the telecommunications industry. She won her election in November.
More recently, T-Mobile hired Mignon Clyburn, a former Democratic F.C.C. commissioner, as an adviser on its deal. Ms. Clyburn, a fierce advocate for low-income communities, has criticized the lack of competition in the wireless industry. The company also relies on Robert McDowell, a former Republican F.C.C. commissioner, as a consultant for the deal.
Democratic lawmakers have focused on the dozens of bookings at the Trump International Hotel by the company executives during the regulatory review. Last month, Mr. Legere stayed at the hotel for two nights in a room that had a rate of $2,246 per night.
The stays, reported by The Washington Post, “raise questions about whether T-Mobile is attempting to curry favor with the President through the Trump Organization and exacerbate our concerns about the President’s continued financial relationship with the Trump Organization,” Senator Elizabeth Warren, Democrat of Massachusetts, and Representative Pramila Jayapal, Democrat of Washington, said in letters to the Trump Organization and T-Mobile.
The Trump Hotel stays probably won’t affect a decision by federal regulators on the deal, analysts said. But Blair Levin, a senior analyst at New Street Research, said the attention on the hotel stays could lead to future scrutiny from states.
“If the story grows, by virtue of direct evidence that T-Mobile’s motive was to influence the president and/or evidence the White House encouraged such behavior, it may increase the motive of Democratic attorneys general to bring an action against the deal,” Mr. Levin said.
Orignially published in NYT.