States Sue to Block T-Mobile/Sprint Deal

It seemed for a little while that the merger of Sprint and T-Mobile might have found a pathway through the regulatory jungle. However, a new roadblock has arisen. A group of nine US states plus the District of Columbia has sued to block the merger.

After gaining support from the FCC chairman, attention had turned to possible concessions that might mollify the DOJ’s antitrust division. However, it seems the states involved in this new lawsuit won’t be deferring to the DOJ’s wisdom and are taking steps of their own.  Usually they’d wait for the DOJ to make its decision before possibly disagreeing with it, but they don’t actually have to do that.

The allegations in the lawsuit won’t surprise anyone: the deal would reduce competition and lead to higher prices. It’s unclear whether the potential concessions rumored, including a spinoff of enough stuff for someone like Amazon to jump in as the #4 carrier, would pass muster with the states. However, the more entities that must be satisfied the less likely any deal is likely to succeed.

Hence, the common wisdom is that the merger is in big trouble now. The stock prices of Sprint and T-Mobile were down in response, moreso Sprint’s given their more vulnerable position operationally. Sprint has warned that without a deal it sees “no obvious path to solve key business challenges”.

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: Government Regulations · Mergers and Acquisitions · Wireless