Sprint, Open Mobile ask for FCC consent of joint venture
Three months after announcing their joint venture, Sprint and Open Mobile filed a petition before the Federal Communications Commission to approve the transaction that would combine the carriers’ operations in Puerto Rico and the U.S. Virgin Islands.
As part of the transaction, a new limited liability company, PR Wireless PR, LLC. will be created, jointly owned by the two carriers. Sprint would have a 68 percent economic interest and a 55 percent voting interest, and Open Mobile would have a 32 percent economic interest and a 45 percent voting interest in the new company, according to the FCC filing released Thursday.
Sprint would have majority control of the governing Board of Directors and the owners of Open Mobile would be represented on the Board and continue to be active in the management and operations of the company, as the companies disclosed in February, when this media outlet broke the story exclusively.
The technical aspect of the transaction calls for Open Mobile to assign its two Personal Communications Service (PCS) licenses, one Lower 700 MHz C Block license, microwave licenses, and an international Section 214 authorization to PR Wireless.
In addition, all of Open Mobile’s operations, including wireless network assets, employees, retail stores, and retail subscribers in Puerto Rico, would be transferred to PR Wireless as part of the proposed transaction, the FCC filing said.
Meanwhile, Sprint would contribute seven 1.9 GHz PCS licenses, constituting all of its 1.9 GHz spectrum covering Puerto Rico and the USVI, two Broadband Radio Service licenses and its interest as a spectrum lessee under a third BRS license (the BRS licenses and spectrum leasing arrangement provide coverage only in Puerto Rico), and microwave licenses to Sprint PR Spectrum LLC, as a wholly-owned subsidiary of PR Wireless.
“In addition, Sprint would convey all of the related wireless network assets, employees, retail stores, and prepaid subscribers to [PR Wireless,] and would pay a revenue-based fee to [PR Wireless] for managing all post-paid subscribers,” according to the filing.
In the document, the carriers stated “Consumers will benefit from the combination of Sprint’s experience as a nationwide service provider and Open Mobile’s experience as a local service provider in Puerto Rico.”
“Specifically, the applicants claim that post-transaction, PR Wireless plans to operate both the existing Sprint and Open Mobile Networks for the foreseeable future and support existing customers with no mandatory migration of customers from one network to the other,” the FCC filing noted.
The carriers also told the FCC that Open Mobile’s customers will benefit from enhanced wireless coverage through the deployment of more cell sites, improved service quality through a 4G LTE upgrade, more choices of competitively priced handsets, a larger number of retail outlets, and expanded, lower cost roaming.
The companies also claimed that Sprint’s customers, both those that live in Puerto Rico and those that travel to Puerto Rico, will benefit from improved 4G LTE coverage and capacity on the combined network, more extensive coverage, and an expanded retail presence in Puerto Rico, according to the filing.
“Our preliminary review indicates that pre-transaction, Sprint is attributed with 37.4 megahertz to 173.6 megahertz of spectrum in total. Open Mobile would transfer 15 megahertz of PCS spectrum in Puerto Rico and 22 megahertz of Upper 700 MHz C Block spectrum in Puerto Rico and the USVI to the new limited liability company, PR Wireless,” the FCC said.
“Post-transaction, Sprint, because of its controlling interests in PR Wireless, would be attributed with 59.4 megahertz to a maximum of 210.6 megahertz of spectrum in total in Puerto Rico and the USVI,” the FCC said, confirming that initially the assignment and transfer of control applications are “acceptable for filing.”
As required, the federal regulator is giving the public a chance to file an opinion on the transaction. Petitions to deny must be in by June 21, 2017, and oppositions to those pleadings must be filed no later than June 28, 2017. Replies to such pleadings must be filed no later than July 6, 2017.
Simultaneous with the filing, the FCC issued a protective order to adopt procedures to limit access to proprietary or confidential information that may be filed during the proceeding.
“While we are mindful of the sensitive nature of some of the information involved, we are also mindful of the general right of the public, and our desire for the public, to participate in this proceeding in a meaningful way,” the FCC said.
“We find that allowing limited access to competitively sensitive materials pursuant to the procedures set forth in this Protective Order allows the public [through appropriate representatives] to do so while also protecting competitively sensitive information from improper disclosure and use,” the agency stated.