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