Mixed Merger Requirements

Carriers that have been part of a “mixed merger” since May of 2018 are subject to a Federal Communications Commission (FCC) requirement called the “Hargray condition.” A mixed merger is a transaction in which a carrier receiving legacy, cost-based support acquires or is acquired by a carrier receiving fixed monthly support, such as model-based funding.

The “Hargray condition” caps the operating expenses of the carriers of the combined entity that receive cost-based support in order to prevent potential cost shifting. This condition requires carriers to:

  • Notify USAC of the merger within 30 days of the closing date.
  • Submit the latest audited financial statements, including all notes and consolidating statements. If a carrier does not maintain audited financial statements in the ordinary course of business, it may submit financial statements that meet the requirements of the annual Form 481 filing.
  • Certify that a carrier has complied with the “Hargray condition” on an annual basis for seven years after the merger closes. This certification should include:
    • A statement that the person doing the certification is an officer or employee of the company, that his/her responsibilities include ensuring compliance with the FCC’s mixed support requirements for transactions and that, to the best of his/her knowledge, the merged company is complying with the Hargray conditions
    • The full name of the certifying company
    • The date of the certification
    • The name of the certifying officer or employee
    • The title or position of the certifying officer or employee
    • The email address of the certifying officer or employee
    • The telephone number of the certifying officer

Carriers should send these submissions to USAC at hcinfo@usac.org.

The Hargray condition “sunsets” if a cost-based carrier involved in a mixed merger becomes a fixed-support carrier at any point during the seven-year period after the transaction closes.

Please contact hcinfo@usac.org with questions.