The T-Mobile/UScellular Transaction: Can a Merger Increase Competition?
Last year, T-Mobile announced its intention to enter into a transaction with UScellular. The deal would include acquiring UScellular’s wireless operations, including its wireless customers and stores, as well as select spectrum assets. In addition, T-Mobile would enter into a long-term agreement to lease space on more than 2,000 UScellular towers.
Valued at $4.4 billion in cash and assumed debt, the transaction has raised only a few eyebrows, most notably among a half-dozen U.S. senators, including Sen. Elizabeth Warren (D-Mass.). In a letter to the U.S. Justice Department (DOJ) and Federal Communications Commission (FCC), the senators argued that the acquisition would further consolidate an already highly concentrated market, reducing competition and potentially leading to higher prices and fewer choices for consumers.
While the transaction will eliminate UScellular from some aspects of the wireless-services market, an issue brief published by the International Center for Law & Economics (ICLE) finds that the deal has the potential to generate significant consumer benefits and—contrary to the senators’ concerns—enhance competition in the mobile-wireless market.