The merger deal between the two telecom companies, Sprint Corp. (Sprint) and T-Mobile had been objected by a group of the attorney generals of New York and California after it was approved by federal regulators. A US district judge is expected to decide the matter today, February 11, 2020, and some sources expected that the court judge, Victor Marrero would be ruling in favor of the Sprint and T-Mobile merger.
Federal Approved While State Opposed
The US Justice Department had approved the merger agreement between the two telecom companies in July 2019. The attorneys of the two US states, however, opposed the deal by arguing that the merger between the two US leading wireless carriers would lead to higher prices of services and affect customers especially the ones who were using prepaid plans with poorer credit.
At present, the two companies are the 3rd and 4th US biggest telecom providers. Moreover, the Federal Communications Commission (FCC) approved the deal in October 2019 on a condition that the telecom carriers agreed to sell shares to Dish Network Corp. (Dish) which would be operating as the fourth competitor in the US telecom market. Meanwhile, the states’ attorneys maintained that Dish was not equipped enough to become a fourth service provider.
Opposing the merger, a former telecoms regulator now at Georgetown Law, Gigi Sohn tweeted her displeasure with reports of the decision, “If #antitrust law doesn’t even block a 4-3 merger like this, we need to start from scratch.” Referring to the market shrinking to three from four competitors, she tweeted, “I’ll have more to say tomorrow after I read the judge’s decision (through my tears).”
Renegotiation of the Merger Deal
Deutsche Telekom owned T-Mobile officials confirmed that Tuesday was the expected date for the judge to finally approve the deal. Europe’s largest telecoms company by revenue, Deutsche Telekom officials expected, “We remain confident that the judge will decide in favor of the transaction.”
During the trial, the executives from the companies including T-Mobile Chief Executive, John Legere testified that the deal would help the companies in building the next generation of wireless, called 5G and would survive Sprint. Sources told Reuters, the two companies would hold talks on renegotiating the terms of their $26.5 billion mergers in the next few days.
Deutsche Telekom officials mentioned that it would start renewing the price deal as Sprint has been seen facing a struggle in its operations lately. However, the Japanese Softbank Group which owns a majority stake, Sprint is likely to consider the proposal.
Meanwhile, a source said, “there is no certainty that there will be a renegotiated deal.” As Reuters approached, Sprint and T-Mobile both declined to comment on the matter. Reuters reported, “Dish shares rose 2% while shares of Sprint surged 69% in Monday’s after-hours trade and T-Mobile stock rose 8%. Shares in T-Mobile parent Deutsche Telekom were up 4.2% at 0917 GMT on Tuesday.”
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