Analyst says T-Mobile-Sprint merger could be doomed



Almost a year ago, T-Mobile announced that it would merge with Sprint. The $26.5 billion deal has yet to close and awaits final regulatory approval from the FCC and the Department of Justice (DOJ). Twice, the FCC had to stop the clock on its legally mandated 180 day review period. One time it was because T-Mobile revised some of its previous filings, and the other time was due to the government shut down.

T-Mobile CEO John Legere keeps insisting that the deal will close during the first half of this year. But according to ECN, analysts at MoffettNathanson have reduced the odds of getting the deal approved to 33% from 50%. Craig Moffett, the firm's senior analyst, says, "It’s time to acknowledge that the odds of the deal are less than a coin toss."

Those against the deal point out that it will reduce the number of major wireless carriers in the states to three from four. This group fears higher wireless pricing because of the reduced competition, and worries about jobs getting cut as the two firms merge. Meanwhile, T-Mobile says that the merged company will add jobs from day one. Both T-Mobile and Sprint say that the merger is needed to keep America competitive in the new global 5G economy. In addition, one could make the argument that a merged T-Mobile-Sprint would be even greater competition to Verizon and AT&T, thus preventing the two largest carriers from raising their prices.

The deal has turned political with approval of the deal seen as a "Republican" move in favor of big business. Several states are reportedly considering filing an antitrust suit in federal court to block the merger. Speaking of politics, T-Mobile was criticized earlier this year when it was discovered that the company spent $195,000 for rooms and services at the Trump International Hotel in Washington D.C. The optics were not good for T-Mobile because it appeared as though the carrier had its executives stay at the hotel only to curry favor with the president so that he wouldn't be inclined to block the deal.

Moffett believes that the DOJ will block the deal anyway. The analyst says that if the agency follows its own guidelines, it would be forced to prevent the merger from taking place. T-Mobile does not have a good history in closing transactions. Back in 2014, Sprint and T-Mobile floated the idea of a merger before both the DOJ and FCC and were basically shot down by the regulatory agencies before a deal was even announced. Four years before that, AT&T announced a $39 billion purchase of T-Mobile. Pressure from the FCC and DOJ forced AT&T to back away from the transaction. As a result, AT&T gave T-Mobile $3 billion, a seven-year 3G roaming deal, and 128 markets AWS markets. Some mark the beginning of T-Mobile's ascension back to this agreement that it made with AT&T.

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8 Comments

1. frequency

Posts: 102; Member since: Aug 13, 2013

Would it be possible HUAWEI buy Spring, and block Sammy's phones?

4. notfair

Posts: 697; Member since: Jan 30, 2017

hahahahahahah. nice joke..

7. Plutonium239

Posts: 1154; Member since: Mar 17, 2015

The federal government would block such a purchase.

2. Jphones

Posts: 252; Member since: Feb 10, 2012

I trust TMobile over bulls**tin Sprint. Guess government don't use Sprint.

3. Dr.Phil

Posts: 2293; Member since: Feb 14, 2011

It’s funny to me how T-Mobile and Sprint can’t be merged but it’s okay for AT&T to buy up all these media corporations and Disney to merge with Fox. Those are mergers that should really matter considering that AT&T is giving itself an unfair advantage by telling consumers you will only get to watch this content at this price if you use our services.

5. Sparkxster

Posts: 1176; Member since: Mar 31, 2017

Well said.

6. Blazers

Posts: 719; Member since: Dec 05, 2011

And immediately after they got approval, they raised their prices on Direct TV. I guess it costs a lot to prop up CNN and the other dinosaur cable channels.

8. Plutonium239

Posts: 1154; Member since: Mar 17, 2015

I don't even know how it would be beneficial for t-mobile and sprint to merge. They use different technology. Sprint's non-lte network is CDMA, not GSM. T-mobile is completely GSM. So after the merger sprint's non LTE will not be usable unless every phone on the joined network has a CDMA radio in it, in addition to the GSM and lte radios. Speaking of LTE, Sprint's LTE is different from that of the other three carriers. I don't see compatibility. T-mobile is compatible with AT&T however.

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