Sprint and T-Mobile are in the final stages of a merger, nearing completion. Following extensive periods of review periods by regulators and a grueling hearing before a committee of US Representatives, a new report from The Wall Street Journal says the outcome isn’t so bright.
According to people familiar with the matter, staff members of the US Department of Justice have already told T-Mobile and Sprint that the merger isn’t likely to be approved in its current state. The cause is apparently the DOJ’s antitrust division, who is worried about the impact of the industry when four major carriers become three.
The nation’s third- and fourth-biggest carriers by subscribers are facing challenges on several fronts, but their most immediate hurdle comes from the Justice Department’s antitrust division, which is considering whether the deal would present an unacceptable threat to competition.
This was a heated topic of debate at the Congressional Hearing and it seems the DOJ is concerned about the impact on current Sprint employees and the fate of their jobs, as well as the raising of service rates following the merger, which has proven to happen in similar mergers throughout Europe.
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 people said.
Following the report’s release, Legere Tweeted in response that the premise of the story is “simply untrue”, also stating that the carrier has no further comment on the story.
The premise of this story, as summarized in the first paragraph, is simply untrue. Out of respect for the process, we have no further comment. This continues to be our policy since we announced our merger last year. https://t.co/3q9CVgkRfv key info: https://t.co/N5YvuuJtPZ
— John Legere (@JohnLegere) April 16, 2019
Sprint and T-Mobile’s argument for the merger is that the two carriers need each other to push forward with 5G and with Sprint’s accumulating debt, it needs T-Mobile so the carrier doesn’t go bankrupt. Legere also claimed that the merger would drive costs down and pass the savings onto the customers.
The final decision is still several weeks away as per the report. But the two carriers are said to remain in talks with government officials and regulators. Several states will reportedly file lawsuits to block the merger for the same concerns.