DOJ already wary of Sprint-T-Mobile combination

DOJ already wary of Sprint-T-Mobile combination
The Department of Justice is one of the regulators that needs to sign off on mergers where there is a question about whether an acquisition removes competition from a market. The DOJ was the agency that fought tooth and nail with AT&T over the latter's $39 billion bid to buy T-Mobile. AT&T eventually gave up, thanks to the tough stance taken by the agency, and had to pay a break-up fee of $3 billion plus some spectrum, to T-Mobile.

Considering that the DOJ can make or break a deal, Sprint CEO Dan Hesse and his boss, SoftBank Chairman Masayoshi Son, paid a visit to the agency. The duo wanted to gauge the reaction of the DOJ to a possible Sprint acquisition of T-Mobile. Hey, it's a great idea. Why spend all of that money on investment bankers and lawyers if the DOJ is only going to put the kibosh on your deal anyway? Besides, banks charge to hold big-time financing aside for a deal.

Those who were made aware of the meeting between the DOJ and the pair of executives, said that the government agency was "skeptical" about a Sprint-T-Mobile combination. Sprint is the third largest carrier in the states, while T-Mobile ranks fourth. But T-Mobile has been leading the industry in innovation and the other three majors in the U.S. have found themselves copying the operator's Uncarrier initiatives. In addition, the mobile operator also offers the lowest prices among the top four stateside carriers, according to a recent report. The Justice Department might not want to see U.S. consumers lose this combination of low prices and consumer friendly ideas.

With financing already in place for a deal, the companies involved are said to be discussing important issues such as the size of the break-up fee, who would lead the company, and whether the combined firm would be called T-Mobile or Sprint. While T-Mobile John Legere remains the most influential executive in the industry for the moment, he has no say on whether T-Mobile is sold. 67% of the company is owned by German telecom giant Deutsche Telekom, and whomever purchases that block of stock has, in effect, purchased T-Mobile.

source: WSJ

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13 Comments

1. Kishin

Posts: 706; Member since: May 30, 2013

If the justice decide no, T-mobile get more $$ and more spectrum to rule the carrier industries. Love T-mobile

3. TheMan

Posts: 494; Member since: Sep 21, 2012

Doubtful. We've seen what happened to AT&T in its failed attempt. It's unlikely that Softbank-owned Sprint will make the same mistake.

6. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

If SoftBank wants even a chance at acquiring DTs T-Mo stake, there will be a break-up fee. It may not be $3B, but there will be a break-up fee. In any event, the DoJ is not going to allow T-Mo to be acquired by Sprint. SoftBank might be able to acquire DTs stake, but a condition of any acquisition of T-Mo will be that it not be merged into Sprint (as well as that Sprint can not be merged into T-Mo). Realistically, I don't see SoftBank acquiring DTs stake in T-Mo. But I do see DT eventually selling its T-Mo holdings, possibly in a public offering.

7. DonkeySauce

Posts: 194; Member since: Dec 03, 2011

T-Mobile is a good option. If you never travel out of city limits.

2. cncrim

Posts: 1554; Member since: Aug 15, 2011

Tmobile and Sprint merge will more likely to take competition away. I don't like the idea the big gun merge, but anyway I have feeling this will be just like ATT and Tmobile ...... not going work and Sprint end up pay break up fee and spectrum.

4. Landmarkcm

Posts: 507; Member since: Aug 11, 2009

Don't wanna see it happen. If it does though down the road, Def don't! put Hesse at the Helm.

5. Miracles

Posts: 560; Member since: Aug 31, 2013

In other words: If it doesn't happen....Awesome...carry on with your lives. If it does happen......make Legere-captain of the ship.

8. Slammer

Posts: 1515; Member since: Jun 03, 2010

So, essentially the DoJ is saying VZW and AT&T shall forever be the top two carriers without any worry of enhanced competition. Even with a TMO/Sprint merge, it would still only remain a third largest. John B.

9. Doakie

Posts: 2465; Member since: May 06, 2009

If it was T-Mobile purchasing Sprint I think they'd be all for it because you have a consumer friendly company purchasing a slow moving, under delivering company. But Sprint seriously never delivers on their promises of network speeds or reliability. It would be like slaving another cruise ship to the helm of the Titanic. Sprint is aiming right at the glaciers. If Softbank is looking to burn up a whole bunch of cash they should throw it at upgrading the Sprint network. Their LTE footprint is pathetic and their EVDO network runs at 50-200 Kbps. To simply put it, their network has been brought to it's knees by too many LTE phones being sold with no LTE network for them to be on. I remember buying my HTC One early last year and some girl was in there asking how soon she could expect 4G in Seattle for her new iPhone he said "4 months." Well there still isn't a reliable LTE network here. It's all lies about delivery. Sprint needs to work on that first before buying anything else...

10. Augustine

Posts: 1043; Member since: Sep 28, 2013

Given the unfettered goal of Deutsche Telekom's to get out of the US market, the corollary of Sprint's shying away from acquiring T-mobile is an open the door to the likes of Dish, not exactly known for its consumer friendliness.

11. OldNorseBruin

Posts: 235; Member since: Mar 12, 2013

I left SPRINT & went to T-MOBILE...not in order to be kidnapped BACK by SPRINT! HELL NO to this stupid idea! Hey SPRINT, go fix your wrecked-ass 3G first!

12. JEverettnow

Posts: 228; Member since: Mar 11, 2013

The bad network arguments are quickly becoming a thing of the past. In my area I have noticed things getting incredibly better and the upgrades aren't even done. They have only been doing capacity upgrades. In areas that are finished with the first phase service is awesome! I can't even imagine what it will be like when they establish the 4g at 800mhz and use the 800mhz for voice.

13. jamesedward318 unregistered

On paper it sounds like the move to make for the majority of the parties involved. But to think how far T-Mobile has come with their network and how antiquated Sprint's network is just spells recipe for disaster.

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