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Lowest Sprint/T-Mobile merger odds hit Wall Street on closing arguments day

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Lowest Sprint/T-Mobile merger odds hit Wall Street on closing arguments day
As if we needed one more indication that fate may be souring on the now-$34 billion merger of Sprint and T-Mobile, the invisible hand of the stock market is now signaling troubles ahead, too. 

When the potential merger of T-Mobile with Sprint was first announced, some on Wall Street gave it a 40% chance to actually happen. When we followed with tangential FCC checks, the probability was brought up from 60% to 70% by financial analysts, rising up to 90% at Oppenheimer even, which basically meant that it is a done deal.

Meanwhile, however, the details about the prepaid Metro, Boost and Virgin brands divestment to the likes of Dish were disclosed, and, just when this looked like the last hurdle to be passed for the merger to take place, with the FCC and DOJ both on board, a lawsuit came in.

In it, a number of state attorneys claim that the resulting New T-Mobile entity will hurt competition, shed jobs and raise prices, with quite a bit of success so far in court, and closing arguments due today, with U.S. Judge Victor Marrero passing a verdict in the couple of weeks afterwards. 

In fact, the lawsuit is one of the main reasons that Wall Street is souring on the merger, indicated by the current record spread between the Sprint and T-Mobile stock prices on closing Tuesday. Sprint ended at $4.80 a share, which is a 40% discount over the price that T-Mobile's merger deal proposed, according to the Wall Street Journal. Big Magenta's stock is doing very well, thank you, what with a million more postpaid subscribers added in the last quarterly results statement.


Sprint, on the other hand, keeps bleeding subs, and during the trial testified that it is having to deal with an "inferior" network that leads it into a Catch 22 when it comes to subscriber churn and mounting losses. While every side exaggerates in a trial, Sprint's chances for survival without the T-Mobile deal aren't great according to Wall Street's stock price spread. 

The state AGs argument that Sprint could pull off a T-Mobile in a few years when left to its own devices doesn't seem very rational on its face, too. All that is left now is to wait for the closing argument today, and then for the final verdict in a few weeks' time which can stretch the wait into April still.

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