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FCC May Clear T-Mobile-PCS Deal Without Vote, Union Says

The silhouette of a customer browsing phones is seen in a MetroPCS Communications Inc. store in San Francisco. Photographer: David Paul Morris/Bloomberg
The silhouette of a customer browsing phones is seen in a MetroPCS Communications Inc. store in San Francisco. Photographer: David Paul Morris/Bloomberg

March 11 (Bloomberg) -- The U.S. Federal Communications Commission may seek to approve, without holding a vote, Deutsche Telekom AG’s proposal to combine its T-Mobile USA unit with MetroPCS Communications Inc., a deal critic said.

The agency may be considering an order approving the deal “at the bureau level instead of the commission level,” Monica Desai, an attorney for the Communications Workers of America, said in a filing today with the agency. Union officials met with FCC staff March 7 and March 8, Desai said in the filing.

“I assume it’s good” for the deal’s prospects and shows the merger is “basically non-controversial” aside from the union’s concerns about employment, David Kaut, a Washington-based analyst with Stifel Nicolaus & Co., said in an interview. “No one thinks this is going to be blocked.”

The deal would reinvigorate T-Mobile, the fourth-biggest U.S. wireless carrier, which would add subscribers and capacity from fifth-largest MetroPCS to compete with market leader Verizon Wireless, No. 2 AT&T Inc. and Sprint Nextel Corp., the third-largest U.S. provider.

The FCC can issue decisions from its department offices, such as the wireless telecommunications bureau reviewing the MetroPCS deal. In such a case, there would be no recorded vote by the five commissioners, political appointees led by Chairman Julius Genachowski, a Democrat.

Neil Grace, an agency spokesman, declined to comment today.

‘Outrageous’ Decision

“This is outrageous,” Debbie Goldman, telecommunications policy director for the Washington-based labor union, said in an interview. “It’s unprecedented that a deal that is this big and has raised controversies about its employment impacts would not be voted on by the full commission.”

Deutsche Telekom, Germany’s largest telephone company, on Oct. 3 announced the deal that will leave the Bonn-based company with 74 percent of the new business after paying MetroPCS shareholders $1.5 billion in cash.

MetroPCS dropped 31 cents at 4:01 p.m. New York time to $10.50, 28 percent below its October high as news of the deal broke. Deutsche Telekom’s American depositary receipts, each representing one share, rose 11 cents to $10.93.

The proposed combination, which would create a company with an estimated workforce of 38,000, is larger than transactions previously handled without a recorded vote, Desai said in the union’s filing.

Job Concerns

The Communications Workers hasn’t opposed the deal and has asked the FCC to impose requirements aimed at preserving jobs after the companies combine. The merger as proposed will eliminate “a significant number of jobs,” the union said in a March 4 filing, without supplying a figure.

T-Mobile, based in Bellevue, Washington, in a March 8 filing said it plans to continue hiring at call centers, “increasing the number of overall U.S. positions.” It didn’t give a number.

The company plans to keep the two brands as separate lines of business and to maintain two networks of retail stores and dealer franchisees, according to the March 8 filing.

The deal will probably win approval from U.S. regulators wary of the market power wielded by Verizon and AT&T, analysts have said. The companies on March 5 announced antitrust regulators were no longer scrutinizing the deal.

Paulson & Co., the biggest investor in Richardson, Texas-based MetroPCS, wants to block the deal. The combined company would hold too much debt, John Paulson, founder and majority owner, said in a Feb. 28 letter to the MetroPCS and Deutsche Telekom boards.

Tim O’Regan, a Washington-based spokesman for T-Mobile, declined to comment. Jim Mathias, a MetroPCS spokesman, didn’t immediately return a telephone call and e-mail seeking comment.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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