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T-Mobile CEO: No knowledge of Trump trying to influence Sprint merger review

T-Mobile US Inc. CEO John Legere told members of Congress on March 12 that he was unaware of any attempts by President Donald Trump, his administration or campaign to contact the U.S. Department of Justice about T-Mobile's proposed merger with Sprint Corp.

In response to questions from Democratic lawmakers, Legere said he is unaware of any conversations between anyone at T-Mobile and the Trump administration about the Sprint/T-Mobile deal. The questions — which came during a hearing held by the House Judiciary Committee's Subcommittee on Antitrust, Commercial and Administrative Law — follow a March report in The New Yorker that said Trump attempted to influence the DOJ's review of the AT&T Inc./Time Warner Inc. merger.

At the federal level, the pending merger between the third- and fourth-largest wireless operators is currently awaiting approvals from the U.S. Federal Communications Commission and the Justice Department. While the deal does not need congressional approval, lawmakers can express concerns to regulators who are considering the merger.

Some Democrats at the hearing raised concerns that Legere and T-Mobile possibly tried to buy political influence by making frequent stays at Trump's Washington, D.C., hotel. T-Mobile has acknowledged spending $195,000 at the Trump International Hotel in Washington, D.C., since announcing its proposed merger with Sprint.

Legere, though, said at the hearing that T-Mobile employee stays at Trump's hotel represented a small percentage of the company's expenditures at hotels in Washington, D.C. According to the company, the $195,000 represents 14% of the $1.4 million T-Mobile incurred at hotels in Washington, D.C., during the same period for travel and other business-related activities.

Top Democrats on the subcommittee also appeared to be convinced that the merger, if it goes through, would harm consumers and result in raised prices. "The combined Sprint and T-Mobile may no longer have any market-based incentive to lower prices and to offer pro-consumer policies once it becomes as large as the other two [largest] carriers," said Rep. Jerrold Nadler, D-N.Y., chairman of the full House Judiciary Committee.

Rep. David Cicilline, D-R.I., who serves as chairman of the committee's subcommittee that oversees antitrust issues, suggested there may be political reasons for why the DOJ has not contested the merger yet.

"The proposed merger of T-Mobile and Sprint is really a critical test: Is the [DOJ's] antitrust division genuinely dedicated to promoting competition or does it only oppose mergers when the White House tells it to do so?" said Cicilline.

However, Rep. James Sensenbrenner, R-Wis., who serves as ranking member on the subcommittee, accused Cicilline of putting a "partisan spin" on the merger before the subcommittee had assessed the proposed deal. Sensenbrenner also suggested that the merger could enhance competition.

"While eliminating a competitor, the merger could put the companies in a much stronger position to take on AT&T and Verizon [Communications Inc.], which have dominated the marketplace," said Sensenbrenner in prepared testimony.

Legere argued the merger "could ensure U.S. leadership in 5G, increase competition, and create American jobs."

In direct contrast, Chris Shelton, president of the Communications Workers of America, the largest communications and media labor union in the U.S., said in prepared testimony that the merger as currently structured would kill U.S. jobs, lower wages and raise prices.

The hearing marked the second time in a month that top executives from the two companies testified before Congress about the pending deal. On a Feb. 7 earnings call, Legere said the deal was on track to receive all approvals in the first half of 2019, though on March 7, the FCC paused its informal 180-day transaction shot clock for review of the pending deal after the two companies submitted new information regarding their network integration plans for 2019-2021 and additional information about fixed wireless broadband services.