In telecom merger mania, skeptical eye from Obama administration

A pair of potentially transformative US telecommunications companies and cable deals could run afoul of Obama Administration regulators who worry that mergers among market leaders would hurt consumers.

With both cable and mobile phone operators grappling with slowing growth, speculation has intensified recently about potential takeovers of No. 4 wireless service provider T-Mobile US and No. 2 cable service provider Time Warner Cable. Some possible buyers, including Sprint and Comcast, may face headwinds in convincing US regulators that their deals would improve competition. "The Obama Administration definitely is more skeptical of large corporate combinations... They are concerned about the effects of market concentration on consumers," said former Federal Communications Commission member Robert McDowell. "It's not an impossible wall to climb over but it is a high wall nonetheless," he added. The Obama Administration's pro-consumer tack could threaten deals that eliminate big competitors within an industry, such as a Sprint bid for T-Mobile or a Comcast bid for Time Warner Cable. Regulators could, on the other hand, welcome transactions that bolster new entrants, such as one combining satellite TV service provider Dish Network with T-Mobile, experts say. "Dish/T-Mobile, from a regulatory standpoint, it would be a slam-dunk," said Stifel analyst David Kaut.

[Dec 24]