Nine states and Washington D.C. file suit to block T-Mobile-Sprint merger

Nine states and Washington D.C. file suit to block T-Mobile-Sprint merger
It has been one step forward, two steps back for the $26.5 billion T-Mobile-Sprint merger. Last month, FCC Chairman Ajit Pai recommended that the deal be approved, but the Department of Justice has yet to make a decision. Amid rumors that the DOJ wants T-Mobile and Sprint to help set up a new competitor in return for approval, Pai allegedly met with DOJ antitrust chief Makan Delrahim on Friday to try to persuade him to approve the deal.

And now, according to Bloomberg, state attorneys general from nine states and the District of Columbia (all Democrats) filed a lawsuit in New York today seeking to block the transaction. Despite promises from T-Mobile that it will freeze its pricing for three years after the deal closes, the plaintiffs say that the merger will hurt competition in the wireless industry and raise prices by at least $4.5 billion a year.

Yes, merging T-Mobile and Sprint into one company will reduce the number of major U.S. carriers by 25% But a stronger T-Mobile-Sprint would most likely provide more competition to AT&T and Verizon, keeping the two top U.S. carriers more honest with their pricing. And if the deal closes, T-Mobile and Sprint have promised the FCC that it will sell off Sprint's Boost Mobile pre-paid unit. With Amazon reportedly interested in Boost, that company's deep pockets might allow it to use Boost to help create a new nationwide postpaid wireless provider. T-Mobile and Sprint could be forced to divest some of their spectrum, and Amazon could be a buyer.

Investors are skeptical that the deal will close


While the FCC is concerned with the technical aspects of the merger, the DOJ and the state attorneys general are more worried about how the deal will lessen competition and lead to higher pricing. The states say that if the merger is approved, T-Mobile-Sprint would have a larger market share among retail consumers than Verizon and AT&T. In some markets, the combined company would control more than 50% of the wireless business.

Bloomberg also points out that investors (which theoretically could include some insiders) are not confident that the deal will close. If the deal is approved, each Sprint stockholder will receive .10256 T-Mobile share for each share of Sprint owned. So with T-Mobile (TMUS) currently trading at $75.35, Sprint's stock (S) should be closer to $7.73 than the current $6.58 if investors were 100% confident that the deal is going to go through. That spread between the value of the deal and Sprint's share price, $1.15, is nearly twice what it was at its lowest point last month. But like everything about this deal, the data is not so cut and dried; in late April the spread was well over $2.00 indicating a high degree of skepticism about the deal getting approved.


Just a few days ago, T-Mobile CEO John Legere released a video in which he explained how many of the things that "the haters" are saying about the T-Mobile-Sprint merger mirror what they were saying about T-Mobile's purchase of MetroPCS back in 2012-2013. For example, the so-called experts said that T-Mobile buying MetroPCS would lead to job losses and the disappearance of the Metro name. Instead, the executive says that the transaction led to the creation of "tens of thousands of new jobs" and that Metro has increased its customer count from 8.9 million to 19 million since the deal closed.

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10 Comments

1. veerhardik

Posts: 10; Member since: Feb 23, 2019

Bulls**t you Democrats messed up the whole country and now you all want to block the merger..

4. Arch_Fiend

Posts: 3951; Member since: Oct 03, 2015

Yeah keep crying lol.

2. Dr.Phil

Posts: 2359; Member since: Feb 14, 2011

It’s kind of funny that some of these same states gave handouts to Amazon for them to do business but somehow Sprint and T-Mobile merging is a problem. I’d be interested to see the lobbying money that keeps some companies out of the legal crosshairs in these states.

8. veerhardik

Posts: 10; Member since: Feb 23, 2019

I m glad merger is going thru and Some crying people comments are hidden due to their none sense and false thinking which is in against the favor of people and country.

9. Reybanz88

Posts: 97; Member since: Jul 28, 2016

Those states must clearly want to keep getting their stipends from At&t and Verizon.... It's sad how they let them literally do anything and merge with whomever.... But when it comes to anything including T-Mo and Sprint it's always an issue. Do you all not want better service in the states? Or is it that they know the taxes people pay will go down because of lower pricing? What's the reason to stop this merger?

10. 312styl

Posts: 2; Member since: Jun 12, 2019

Of course all the lawsuits are filed by democrats! They're a bunch of f**king idiots! Democrats are only scrounging for votes because elections are coming up. Also, because they feel they're opposing Trump since it was reported Tmobile execs stayed at his hotels a few months back. Where was the opposition when ATT merged with Cingular or VZW acquired Alltel? I'm hoping Tmo & Sprint successfully merge. Let them divest some assets & let this happen!!!

* Some comments have been hidden, because they don't meet the discussions rules.

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