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T-Mobile/Sprint Merger Is In Danger of Being Rejected By DOJ (arstechnica.com)

Posted by BeauHD on from the fingers-crossed dept.

An anonymous reader quotes a report from Ars Technica: T-Mobile U.S. and Sprint are facing potential rejection of their proposed merger at the U.S. Department of Justice. DOJ staffers "have told T-Mobile US and Sprint that their planned merger is unlikely to be approved as currently structured," The Wall Street Journal reported today, citing people familiar with the matter. "In a meeting earlier this month, Justice Department staff members laid out their concerns with the all-stock deal and questioned the companies' arguments that the combination would produce important efficiencies for the merged firm," the Journal wrote. DOJ staffers' recommendations aren't the final word at the agency. The department's antitrust chief, Makan Delrahim, would decide whether to challenge or allow the merger.

The Justice Department's antitrust division is reviewing the merger and could file a lawsuit in federal court in an attempt to block the deal. Success isn't guaranteed, a fact the DOJ was reminded of when a U.S. District Court judge allowed AT&T to buy Time Warner despite DOJ opposition. The DOJ could also approve the merger with conditions, but that would require agreement with T-Mobile and Sprint on what those conditions would be. "T-Mobile and Sprint could offer concessions, such as assets sales, to address the government's concerns," the Journal wrote. Sprint shares "are trading at a roughly 20 percent discount to the price implied by the all-stock deal, signaling Wall Street doubts about the combination's chances," the report also said. T-Mobile CEO John Legere denied the report in a tweet, saying that "[t]he premise of this story... is simply untrue. Out of respect for the process, we have no further comment." Sprint Executive Chairman Marcelo Claure also claimed that the "article is not accurate," adding that Sprint "continue[s] to have discussions with regulators about our proposed merger."

61 comments

  1. Equal consideration under the law? by fortythirteen · · Score: 1

    If T-Sprint can't legally exist, when there is still AT&T and Verizon to compete with them, then what's the case for a company like Google not being broken up?

    1. Re:Equal consideration under the law? by omnichad · · Score: 1

      Preventing a monopoly is a separate and faster process than slowing one or breaking one up. Monopolies are technically legal if not abused. They would have to be shown to be abusing their monopoly position to get broken up.

    2. Re:Equal consideration under the law? by rmdingler · · Score: 2, Informative

      Combined, Sprint and T-Mobile will still only be the third largest carrier in the US behind Verizon and AT&T, hardly monopoly territory.

      It seems more likely they haven't greased the right wheels in Washington.

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    3. Re:Equal consideration under the law? by Anonymous Coward · · Score: 0

      If T-Sprint can't legally exist, when there is still AT&T and Verizon to compete with them, then what's the case for a company like Google not being broken up?

      Plenty of monopolies continue to prove that Too Big To Fail is still valid in 2019.

    4. Re:Equal consideration under the law? by squiggleslash · · Score: 3, Informative

      Stopping the merger has nothing to do with preventing monopolies, in fact the reverse is true.

      If the Sprint-T Mobile merger goes ahead, there will be three large mobile carriers able to compete with one another.

      If it doesn't, there will be two large mobile carriers and one smaller carrier. (Sprint is pretty much dead at this point, it's not shown a yearly profit in over a decade, the mobile portion hasn't, to the best of my knowledge, ever been profitable.)

      Two carriers dominating the industry is far more monopolistic than three.

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    5. Re:Equal consideration under the law? by Martin+Blank · · Score: 2

      Sprint actually posted a profit for the last fiscal year, though I'm not sure how much that had to do with accounting tricks. They had a profitable mobile division before the Nextel purchase, but they never were able to take full advantage of the push-to-talk architecture that Nextel brought (and that was the entire reason for the $35 billion purchase). Then they made the extraordinarily bad decision to go with WiMax instead of LTE, blowing billions in the rollout and making them less desirable to customers because there would be no 4G roaming. It could have survived one or the other, but not both.

      I'm not sure what DOJ's problem is, but I hope that the two companies are willing to address it. As you say, Sprint is effectively dead at this point (I say this as a 17-year customer of Sprint and Nextel), and will declare bankruptcy. They recently announced the sale of their HQ campus in Overland Park, KS, with a deal to lease it back. That's never a good sign. It's unclear how much more money Masayoshi Son is willing to pour into it, but it has to stop at some point. Then the remaining three companies will scramble to buy up parts of it at pennies on the dollar, and I doubt it will be as clean or have as even a result as the current merger could.

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    6. Re:Equal consideration under the law? by hispeedzintarwebz · · Score: 1

      It's especially shitty that so many of the ISP's have been allowed to merge and concentrate and get out of control, but this might be blocked, considering that generally where most people live they can pick between the four (potentially three if this goes through) major wireless carriers. The same for ISP is not true - how screwed you are is a direct function of where you live. There's not much consistency here - this seems like a merger that would actually foster some better competition, but so many that have passed easily stifle it.

    7. Re:Equal consideration under the law? by Anonymous Coward · · Score: 0

      they never were able to take full advantage of the push-to-talk architecture that Nextel brought

      Push to talk cell phones is simply a gimmick. I'm glad it is mostly dead. No, you don't look cool loudly using your phone in public.

    8. Re:Equal consideration under the law? by dgatwood · · Score: 1

      I'm not sure what DOJ's problem is, but I hope that the two companies are willing to address it. As you say, Sprint is effectively dead at this point (I say this as a 17-year customer of Sprint and Nextel), and will declare bankruptcy. They recently announced the sale of their HQ campus in Overland Park, KS, with a deal to lease it back. That's never a good sign. It's unclear how much more money Masayoshi Son is willing to pour into it, but it has to stop at some point. Then the remaining three companies will scramble to buy up parts of it at pennies on the dollar, and I doubt it will be as clean or have as even a result as the current merger could.

      There's another possibility: A tech company that would benefit from owning a carrier (Apple, LG, Samsung, etc.) could buy them. Apple was reported to have been considering starting an MVNO. If Apple really wanted to get into services and reduce their ties to hardware, I can't think of a better way to make money off the Android ecosystem than to own one of the carriers that provides service to Google Fi (which currently roams on Sprint, T-Mobile, and U.S. Cellular).

      And the only reason Sprint is losing money is that it doesn't have enough customers to cover the cost of upgrading their service hardware. But imagine if every iPad came with some basic level of free service, and that were used as a selling point for the devices themselves. Suddenly, that concern essentially goes away.

      And the same argument could be made for any other hardware manufacturer (except perhaps Google, because it already has Fi).

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    9. Re:Equal consideration under the law? by Anonymous Coward · · Score: 0

      That's all cool and all, but here's the real problem:

      T-Mobile is okay at best. But Sprint is fucking shit. Sprint has always been a steaming pile of fucking shit, complete with little undigested, shit-filled corn nuggets mixed in.

      Many of us remember the glory that was Nextel, and how it instantly went to shit the moment Sprint was involved.

      So the real question is, will this really be three large providers able to compete with one another? Or is it going to finally reduce us to two large carriers with not even a minor player?

      The latter seems likely, because Sprint is a fucking cancer.

    10. Re:Equal consideration under the law? by luther349 · · Score: 1

      yes but unlike sprint and Nextel t-mobile will be the one fotting the bill and in charge. sprint got nexttel because they wanted the towers it was a cheap and easy way to expand there coverage. it will be the same t-mobile they will buy sprint for the towers and as soon as any stipulations expire delete sprint from the equation.

    11. Re:Equal consideration under the law? by Martin+Blank · · Score: 1

      For general consumers, sure. But there were a lot of commercial applications where walkie-talkies didn't quite work. It also reduced the number of devices carried by construction workers, security guards, first responders, and a host of others.

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    12. Re:Equal consideration under the law? by Martin+Blank · · Score: 1

      I don't think the benefits are there. There's no, for lack of a better word, synergy, and huge antitrust issues. Apple offers some free data for iPads and a discount upgrade, but using it on other networks requires paying higher rates. Or maybe the network only works (or only fully works) with Samsung or Apple devices. There's already a lot of grumbling on both sides of the aisle in Congress over companies spilling into other silos. It's not enough to get the law changed yet, but it's enough that a company like Apple or Samsung (which also would have foreign ownership issues) would hesitate. It may even be the reason that Apple hasn't moved on the MVNO concept.

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  2. What do you bureaucrats know, anyway? by Anonymous Coward · · Score: 0

    Given that the government is a violently imposed monopoly, I'm not it even makes sense to trust that it can temper a voluntarily grown monopoly.

    To me, this just means the paper-pushing, self-serving bureaucrats in the DOJ didn't get their wheels greased sufficiently. I mean, who are these bureaucrats, anyway? They weren't elected. Are the made of finer clay than the people than the rest of us, who cannot just decree our income regardless of performance?

    1. Re:What do you bureaucrats know, anyway? by Anonymous Coward · · Score: 0

      That's probably what happned. The DoJ rarely declines mergers these days. Because fuck customers, they shouldn't get to choose between companies that offer the same goods and services with different terms and prices.

  3. Why this one? by Daetrin · · Score: 5, Informative

    AT&T merging with Time-Warner is fine, Disney and Fox merging is fine, but T-Mobile and Sprint is going too far?

    I'm all well and good with the DOJ exercising its functions in general, but maybe they should have started exercising them a little earlier?

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    1. Re:Why this one? by Anonymous Coward · · Score: 0

      Please no. T-Mobile rocks so far for myself. I have not heard much good of Sprint.

    2. Re:Why this one? by omnichad · · Score: 1

      Sprint's not bad. Their coverage isn't as good, but considering they charge barely more than half what the two major carriers charge they have done better with their infrastructure money dollar-for-dollar. The merger with Sprint would at least give them both a better position - neither have the vestiges of old Bell that the other major players have and so they're both less likely to be abusive.

    3. Re:Why this one? by jonwil · · Score: 5, Informative

      The DOJ actually blocked the AT&T/Warner merger but were overruled by the courts.

    4. Re:Why this one? by Anonymous Coward · · Score: 0

      AT&T = freedom company
      Time-Warner = freedom company
      Disney = freedom company
      Fox = freedom company
      T-Mobile = German company

      It's like Monsanto can do nothing wrong as long as it's American, but the moment Bayer, a German company, buys it, Monsanto starts losing court cases.

    5. Re:Why this one? by Xuranova · · Score: 2

      The DoJ TRIED to stop the ATT/TW merger and lost in court.
      The DoJ had Fox make concessions with divesting 22 regional sport channels since tESPN is probably the singles biggest force in sports broadcasting(property of Disney).

       

      --
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    6. Re:Why this one? by MachineShedFred · · Score: 2

      No, instead Sprint's legacy is being the spawn of a railroad company, and railroad companies never did anything bad or abusive in the past.

      FYI, "Sprint" used to be an acronym: Southern Pacific Railroad Internal Network Telecommunications

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    7. Re:Why this one? by Anonymous Coward · · Score: 1

      As it turns out "the President doesn't like you" isn't good enough legal reason to block the merger of two companies.

    8. Re: Why this one? by Anonymous Coward · · Score: 0

      So we need MORE foreign ownership of companies to subvert regulatory and judicial capture? Interesting take, I'm all for it!

    9. Re:Why this one? by Solandri · · Score: 3, Interesting
      AT&T and Time Warner are, for the most part, orthogonal. Most municipal governments have granted a cable monopoly to a single company. So there were very few areas where AT&T (U-verse cable, not phone/DSL) competed with Time Warner. Whereas Sprint and T-Mobile (and Verizon and AT&T) are direct competitors almost everywhere.

      This argument is a bit weakened since AT&T owns DirecTV. But IMHO that merger was the one which should never have been allowed since (1) DirecTV competed with every cable company, and (2) the fact that DirecTV and Dish competed with every cable company was the entire basis of the previous ruling that local cable monopolies were OK. The cable companies successfully argued that they weren't really monopolies because satellite TV competed with them. By that reasoning, the moment AT&T bought DirecTV (which had bought a chunk of Dish), every cable monopoly contract in the country should have been invalidated and all those local governments forced to allow at least two cable companies to compete.

      I'm for this merger BTW (disclaimer: I'm on Sprint). I don't see four cellular carriers as realistic - Sprint has been on life support for close to a decade. I only see two realistic outcomes here.
      • Sprint and T-Mobile merge and we have three reasonably strong cellular carriers.
      • Or they block this merger, Sprint goes bankrupt a few years later. Verizon and AT&T (being in the financially stronger position) buy up most of what used to be Sprint. And we end up with two cellular behemoths and a struggling T-Mobile.

      You do NOT want the second one. Most of the discount MVNOs are using Sprint's network (part of the reason why Sprint regularly finishes last in speed tests - Sprint went for quantity over quality). If Sprint goes bankrupt, all those MVNO network contracts will be invalidated. Prices on all those MVNOs will go up as they have to negotiate new contracts.with the remaining three carriers. With a merger, the new Sprint/T-Mobile will still be legally bound to honor those old MVNO contracts.

    10. Re:Why this one? by Anonymous Coward · · Score: 0

      AT&T merging with Time-Warner is fine, Disney and Fox merging is fine, but T-Mobile and Sprint is going too far?

      AT&T and Time Warner weren't competitors or operating in the same industry, so there wasn't anything wrong with merger, though the DoJ did try.

      DoJ should have tried to stop Disney and Fox merger since they operate in the same industry and are direct competitors. But since Trump is buddies with Rupert Murdoch and Trump didn't go crying to DoJ about it like he did with AT&T-Time Warner merger, DoJ didn't do anything to try to stop it.

      T-Mobile and Sprint operate in the same industry and are direct competitors. Trump isn't buddies with anyone at T-Mobile or Sprint, so the DoJ is operating on their own. And so as to give the perception they're doing their job, they're going to block a merger that would reduce competition.

    11. Re:Why this one? by Bradac_55 · · Score: 1

      Technically the DOJ can't block or allow anything they can only go to court to try and stop it.

    12. Re:Why this one? by luther349 · · Score: 1

      sprints biggest mistake was killing iden for cdma. everyone loved the 2 way feature. relly the case with emergency services.

    13. Re:Why this one? by luther349 · · Score: 1

      none of that was fine. but greedy short sighted investors that are often also in government get there way more often then not.

    14. Re:Why this one? by luther349 · · Score: 1

      they didn't block it but they did want to. but they lost in court.

    15. Re:Why this one? by Anonymous Coward · · Score: 0

      I didn't love it. It's extremely annoying being around someone using that with the constant loud beeps. Almost as bad as the employees in Walmart and other stores who think they need to have their walkie-talkies on max volume to show how "important" they are.

    16. Re:Why this one? by Anonymous Coward · · Score: 0

      The other part is that Time Warner sold of its cable/internet division (Time Warner Cable), so the merger is of a media(?) company with AT&T. Of course, that means it was a vertical merger: a content producer with content distributor.

      I argue that vertical separation of internet infrastructure (fiber/coax) from content producers (Comcast) is needed for true net neutrality. Basically, various ISPs, television, phone, or whatever companies all run over same set of wires. The customer may pay a base fee for the wire access, but then pays for individual services from competing companies. As it stands, data caps and throttling are implemented solely to push customers to purchase television services.

      I wouldn't be sorry to see Sprint go. Outside of MVNOs, Sprint's prices are atrocious considering the poor state of their network. They use CDMA and typically whitelist phones, so you can't take an old Verizon phone to their network. (Verizon's had high prices and limit phone selection as well, but at least their network is good.) The merger won't necessarily be bad as long as it's T-Mobile that's in charge, not Sprint.

      That said, I think it might be possible to merge all the networks into one that covers all frequencies with the largest coverage map. AT&T, Verizon, etc. would co-own the infrastructure and receive some share of revenue based on their controlling stakes in towers. Customers would only purchase from MVNOs, thus enabling competition.

  4. No Danger by sproketboy · · Score: 0

    It should be rejected. Fuck all these mergers you fucking monopolist fucktards!

    1. Re:No Danger by MachineShedFred · · Score: 2

      Yeah, because having the #4 mobile operator in the US fall apart from bankruptcy and have the top 3 buy their assets and leave their customers in the cold is a way better outcome than having #3 and #4 merge, creating.... the #3 largest mobile operator in the US.

      This deal would close the gap between the top two and #3, ensuring better competition and keeping the market working the way it's supposed to. Does anyone know what the DoJ's specific complaints are here? As I understand it, their ability to block these kinds of things are based upon antitrust law, and it's pretty clear this isn't creating a monopoly of any sort - not in mobile communications, and not in traditional long distance carrier service as T-Mobile doesn't operate any.

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    2. Re:No Danger by Anonymous Coward · · Score: 0

      Worry not, oh padawan. This news article is just a way to drive down the stock prices before the merger announcement. After all, we can't have those b-b-billionaires paying too much for their about-to-worth-trillions stock, now can we.

    3. Re:No Danger by Anonymous Coward · · Score: 0

      Sprint has almost nothing to offer T-Mobile besides spectrum licenses. The Sprint network has always been subpar since they sold their original network to voicestream which was later bought out by T-Mobile.

      Isn't Sprint still using CDMA in many areas? I did a test run of their LTE a couple years ago and it was awful.

      All of these providers need to stop ovesubscribing and gouging their customers instead of concentrating on merger after merger.

    4. Re:No Danger by sproketboy · · Score: 1

      Spoken like a true Marxist. Enjoy the gulag.

  5. What's the case for Government not being broken up by Anonymous Coward · · Score: 0

    Google has to convince people to give it resources; it doesn't get to point guns at people while saying "Pay your fair share, comrade."

    Apply your internal heuristics and logic to this organization you call "government", and see that it too must be broken up (and ultimately thrown away for being a decrepit, vestigial relic from mankind's barbaric, authoritarian past).

  6. I hope not by nospam007 · · Score: 1

    It can only get better, hardly worse than now.

  7. They must not have followed proper procedures by Bohnanza · · Score: 1, Informative

    These Citizens United must not have distributed enough Free Speech.

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  8. /. is blackhat SEO liars by Anonymous Coward · · Score: 0

    How do anonymous readers submit stories? This article says it's from anonymous arstechnica. I tried to submit anon! I can't. Blackhat SEO bullshitters of slashdot.

  9. Hotel rooms by Anonymous Coward · · Score: 1

    Sprint and T-Mobile just haven't booked enough rooms in Trump hotels.

    1. Re: Hotel rooms by Anonymous Coward · · Score: 0

      Lullllllzzzzzz! Fuckdrumpfamiritebroooo?

    2. Re: Hotel rooms by Anonymous Coward · · Score: 0

      Former Massachusetts Gov. William Weld (R) argued Wednesday that it wasn't "spying" when the FBI investigated the Trump campaign in 2016, breaking with Attorney General William Barr.

  10. Owners by spinitch · · Score: 4, Interesting

    Coincidentally, Both T-Mobile US and Sprint have large foreign entity owners. SoftBank seems willing to give into pressure to not use Huawei but not sure if Deutsche Telecom which has broader telecom services investments will block Huawei.

  11. Doesn't that reflect badly on government? by Anonymous Coward · · Score: 0

    Isn't the problem not money or capitalism, but the fact that government is [inherently] corrupt [because their existence is predicated on violent imposition]?

    1. Re:Doesn't that reflect badly on government? by Anonymous Coward · · Score: 0

      People keep saying this, but I don't recall any government being violently imposed on myself.

      Pretty sure in the United States, we haven't had a violent overthrow of a government in about 150 years. And since this article is about two companies in the United States merging, and dissent coming from the United States federal governement, I'm not sure what your point is.

    2. Re: Doesn't that reflect badly on government? by Anonymous Coward · · Score: 0

      governments aren't inherently corrupt. People keep ignoring the way elections are funded and run that leads to this. Other countries don't have this level of issue with legalized bribery.

  12. But who will build the roads if not for THE gov? by Anonymous Coward · · Score: 0

    There can be ONLY ONE road builder!

    How should interest rates be set? BY THE ONE TRUE CENTRAL BANK, OF COURSE!

    Do you people even hear yourselves?

  13. Book more rooms by Cajun+Hell · · Score: 2

    This is Trump's way of saying that he doesn't care if T-Mobile employees literally stay at his hotel, but they damn well better pay for more of those rooms.

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  14. Not enough bribes yet by rsilvergun · · Score: 1

    they have the misfortune of doing this in a major election cycle. They'll be bled for everything they're worth.

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  15. 5G by Anonymous Coward · · Score: 0

    Hoping this merger goes through! In order for USA to be competitive in the 5G space, specifically in rural areas and biz connectivity this makes sense.

  16. That's not the point by rsilvergun · · Score: 5, Insightful

    it's not about how big they'll be, it's about having one less carrier. Also, T-Mobile was the "uncarrier". And as cringey as that sounds it really did count for something. They were spiraling downhill fast and then switched to unlimited talk/text/data while everyone else was using nasty tricks to get you to go over limit and hit you with a $300 bill once or twice a year. I switched to T-Mobile when AT&T bought out Cricket for just that reason, and while Cricket didn't go the way of AT&T's metering and overcharges it's mostly because T-Mobile's strong competition wouldn't let them.

    It's not just that we're reducing competition, it's that we have a recent example in our mind's of why we need competition.

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    1. Re:That's not the point by Anonymous Coward · · Score: 0

      I agree with you about T-mobile. I'd still be with them if they didn't have a terrible coverage hole around my current home.

      However, would you rather have 3 viable competitors, or 2 viable competitors and 2 that are destined to fail?

    2. Re:That's not the point by luther349 · · Score: 1

      them buying sprint relly is just a giant wast of money. what does sprint offer t-mobile does not have. crappy old cdma towers. litterly 0 expansion in years. shit big city only coverage.

  17. good by Anonymous Coward · · Score: 0

    we need more companies. The current T-mo is nice. Sprint is utter vomit

  18. The inside guy is Verizon by h4x0t · · Score: 1

    Ajit is a Verizon man. This admin isn't likely to allow their competitors to get bigger and compete.

  19. It's because AT&T is owned by the Gov secretly by Anonymous Coward · · Score: 0

    It's because AT&T is owned by the Gov secretly. Big Gov who loves AT&T and has saved them multiple times, and allows their monopolies to exist, won't allow a competitor to the government ran Monopoly, AT&T

  20. T-Mobile's love for Trump hotels by Anonymous Coward · · Score: 0

    Who wants to be that if this merger gets blocked that John Legere and other T-Mobile execs will no longer stay in Trump hotels?

  21. Bandwidth by Anonymous Coward · · Score: 0

    Sprint has bandwidth. AT&T and Verizon have gotten most of the available bandwidth, which leaves T-Mobile very vulnerable. Tmo currently has no other avenue to get enough bandwidth to increase market share in the US, and the 2 big carrier will make sure that they never will. Further, it appears that Sprint can't deliver 5G service in most of their core service areas, which means that competition will be down to 3 carriers promptly, and 2, when AT&T and Verizon bleed earchother over Sprint's spectrum, and Tmo become uncompetitive.

    The DOJ's concern, if anything in the WSJ article is true, is Tmo getting an unfair advantage in a few markets. I'm not sure what those markets are, because I've never met anyone who knows anyone who has better service with Tmo than AT&T.