United States: Getting Approval For Sprint Merger

Last Updated: November 5 2013
Article by David I. Reader and Gregory E. Kunkle

Sprint Nextel Corp ("Sprint"), the third largest wireless carrier in the United States, recently found itself to be a very sought after wireless services provider. Not necessarily by customers, as Sprint lost more than 250,000 subscribers during the first quarter of 2013.  Instead, Sprint found itself weighing competing takeover offers – a $20.1 billion offer from SoftBank Corp. ("SoftBank"), a Japan based telecommunications company, and a $25.5 billion offer from DISH Network Corp. ("DISH"), a U.S. satellite television provider.    

The parties spent several months arguing their various positions to the Federal Communications Commission ("FCC"), until DISH ultimately withdrew its offer at the end of June and the FCC consented to the SoftBank transaction on July 3, 2013. The Softbank/Sprint deal closed on July 10, 2013 nine months after talks began last October. The transaction is a good opportunity to explain the FCC's role in the merger and acquisition of telecommunications providers and the purchase and sale of their key assets – FCC wireless licenses.    

The FCC review

The FCC is an independent United States government agency that regulates telecommunications in the U.S. and its territories.Under Section 310(d) of the Communications Act of 1934, as amended, no FCC wireless license may be assigned or transferred, either voluntarily (through an asset acquisition) or by transfer of control of the license-holding entity (through an equity acquisition), without the prior consent of the FCC. Because SoftBank's offer was made six months prior to DISH's involvement, the FCC was on its way toward completing its review of the proposed Sprint-SoftBank merger when DISH made its offer.  For its part, DISH initially encouraged the FCC to wait on its review until Sprint picked between suitors. 

Significant public interest benefits  

DISH argued that a merger between Sprint and DISH would offer significant public interest benefits not present in the SoftBank deal, including because DISH (a) holds spectrum that is compatible with Sprint holdings and (b) has an existing nationwide service installation network that could bring 4G wireless to rural America. Such public interest benefits are a key component of the FCC's review but it is unique for the FCC to be asked to weigh one purchaser against another. Typically those issues are settled on the private market with the FCC serving as a gatekeeper to review the final decision of a company's shareholders. In any event, those arguments were never addressed since DISH withdrew its offer before the FCC issued its consent to the SoftBank transaction.   

Minding the regulator

Sprint, a major wireless services provider, clearly understood its obligation to obtain the FCC's consent to the proposed transaction.The application of this requirement may be less obvious to smaller telecommunications service providers, non-telecommunications providers that hold FCC licenses for internal communications, as is common in many industries including manufacturers, utilities and energy companies, and transportation, and those who desire to enter the telecommunications business. 

For such companies the fact that their operation is governed by, and completion of the deal hinges on, the FCC is often overlooked during a merger, equity purchase or asset sale.  What follows are some suggestions to overcome the FCC hurdle.

Identify FCC "Regulated Assets"

1) Telecommunications Assets Involved. 

Ascertaining the steps necessary to comply with the FCC's requirements begins with an identification of the telecommunications assets involved in the deal.  A transaction for the sale of wireless licenses will differ from a transaction that also includes infrastructure, such as towers and equipment.  The terms and conditions for a transaction that includes customers will differ yet again. 

Where only wireless licenses are involved, the FCC generally requires that the parties submit an application seeking consent to the transaction in advance of closing.  A purchaser who wants to relocate the license coordinates to its existing towers and base stations may also desire FCC consent at this pre-closing stage. The process may be slightly different where infrastructure is part of the deal.  For example, the sale of a tower can be reported to the FCC immediately after closing.  When the deal includes a customer base, the parties must notify customers and comply with prior notification requirements to the FCC.  

2) Length of FCC Review Process.

The level of complexity involved in the FCC's review process varies depending on the type of transaction. Certain transactions can be approved in as little as one day. Others, particularly those involving telecommunications service providers, may take several months. The Sprint/SoftBank merger described above was under review for over seven months.          

3) The Closing

The parties may consummate the underlying deal only after the FCC has processed the application and consented to the transaction. Closing must take place within 180 days of the release of the Public Notice of the FCC's consent to the transaction, although extensions of the 180-day period are routinely granted if closing is delayed.  Once closing occurs, the acquiring entity must submit a Notification of Consummation providing the FCC with the closing date within 30 days thereafter. Selecting the closing date, however, is otherwise left to the discretion of the parties, and the FCC does not specify a date for closing to occur. Waiting until after closing has occurred to obtain FCC consent to a transfer of licensee control or assignment of licenses may result in fines or other penalties for failing to request and secure prior FCC consent to the transaction. 

Negotiation, Due Diligence and Documentation

The need to identify FCC regulated assets and obtain FCC consent are only part of the negotiations, documentation and due diligence associated with the transaction. 


While the parties will bring to the negotiations their perception of deal value and desired items, they will ultimately through negotiations decide on the broad parameters of the deal which most likely (a) will include the deal structure and assets being bought and sold, the price (including purchase price adjustments and payment terms (such as deposit, periodic payments, installment payments and interest)), and (b) may identify circumstances where a breakup fee and/or deposit return is appropriate if no closing occurs, and (c) establish post-closing obligations.  The parties' business people, lawyers, accountants, and financial advisors will be involved in any or all negotiations, and should be involved early to help ensure the definitive agreement accurately describes the deal contemplated.


The negotiations will be memorialized by a written agreement reflecting the negotiations.  The agreement will also address items that were not brought up during negotiations but which relate to and/or clarify the negotiated items, arise from due diligence review, and present usual and customary representations, warranties, covenants, conditions, and indemnities typical of these types of deals.  In order to get to the definitive agreement, the parties may have executed previously a confidentiality agreement and letter of intent/memorandum of understanding.  Bottom line, the parties should expect the definitive agreement to address more than what was negotiated, but reflect at least what was negotiated. Lastly, do not overlook the closing deliveries.  Make certain those documents do not change the benefit of the bargain.

Due Diligence

Due diligence is a party's way to confirm all that the other party is saying about the business and items (including any FCC licenses) to be acquired.  Negative findings stemming from a due diligence review may stop the transaction before definitive agreement negotiations commence or permit a party to terminate a deal after signing an agreement.  Due diligence will shape the definitive agreement and each party's protective devices.


Parties are strongly advised to seek FCC consent at the outset, rather than to beg for forgiveness after the deal closes for failure to request agency prior consent.   Identifying when FCC-regulated assets are involved in the transaction, and addressing those assets and FCC requirements upfront can save time and money.  Couple that with a properly drafted definitive agreement to preserve the deal and protect your interests.

First published by the Telecoms Legal Post.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions