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FCC chief tells Sprint chair he is skeptical on T-Mobile deal

U.S. FCC Chairman Tom Wheeler testifies before the House Communications and Technology panel on Capitol Hill in Washington December 12, 2013
U.S. FCC Chairman Tom Wheeler testifies before the House Communications and Technology panel on Capitol Hill in Washington December 12, 2013

By Alina Selyukh and Sinead Carew

(Reuters) - Federal Communications Commission Chairman Tom Wheeler expressed his skepticism about a potential merger between Sprint Corp and T-Mobile US Inc in a meeting with Sprint Chairman Masayoshi Son on Monday, according to an FCC official briefed on the matter.

Son, chief executive at Tokyo-based SoftBank Corp, which acquired Sprint last year, met with the top U.S. telecommunications regulator alongside Sprint Chief Executive Dan Hesse.

Wheeler told Son and Hesse he was highly skeptical of the potential bid by No. 3 wireless provider Sprint to acquire No. 4 rival T-Mobile, according to the FCC official, who was not present at the meeting.

Wheeler said he would keep an open mind about the potential transaction, according to the official, and generally echoed comments made last week by antitrust chief William Baer, who gave long odds to a regulatory approval of mergers between any two of the top four wireless phone companies.

Sprint has been trying to convince U.S. regulators that the prospect of more U.S. mobile industry consolidation should not be dismissed without a fair review, according to a person familiar with the situation.

Sprint's argument is that the current market isn't serving U.S. consumers well because the two top players Verizon Communications Inc AT&T Inc are so dominant that it makes sustainable competition from the other two players very challenging, the person said.

A Sprint spokesman declined comment on Monday. The FCC does not comment on merger speculation. FCC chiefs routinely meet with industry executives in sessions that often cover a wide range of topics.

A SoftBank spokesman in Tokyo declined to comment. Separately, a person close to SoftBank said: "I'm not unduly surprised by the FCC chairman's skepticism. I feel it's a rather typical reaction."

Son's SoftBank has recently been in talks to acquire T-Mobile, itself controlled by Deutsche Telekom, sources have told Reuters, although the deal would face strong headwinds in getting regulators' approval at the Justice Department and the FCC.

Baer and Wheeler have both hailed the 2011 rejection of a merger between AT&T and T-Mobile as yielding a more competitive market that is better for consumers. Wheeler has routinely answered public questions about potential wireless mergers by saying that he is an "unabashed" defender of competition.

AT&T over the weekend announced a plan to cut prices on its large shared data plans in the latest sign that the rivalry between the top U.S. cellular players may be triggering increased discounting.

In Tokyo SoftBank shares rebounded after falling as much as 5.8 percent on Tuesday morning to 6,655 yen, their lowest in more than four months. At midday the stock was up 2.6 percent, defying a 2.6 percent drop in the benchmark Nikkei average.

(Reporting by Alina Selyukh in Washington and Sinead Carew in New York; Additional reporting by Maki Shiraki in Tokyo; Editing by Nick Zieminski, Cynthia Osterman and Kenneth Maxwell)

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