U.S. Could Block Rumored Sprint & T-Mobile MergerBy: Sean Patterson - January 29, 2014
With T-Mobile now adding hundreds of thousands of customers per quarter and Sprint struggling to keep its subscriber numbers up, the rumored merger between the third- and fourth-largest mobile providers in the U.S. still appears to be in the works.
According to a new report in the Wall Street Journal, Sprint board members met this month with U.S. Department of Justice authorities to discuss the possible merger. The report’s unnamed “people briefed on the conversation” are quoted as saying the USDOJ would be skeptical of the merger. The Justice Department reportedly considers the current four major carrier arrangement to be important for continued competition in the U.S. mobile space.
Sprint completed its own merger with SoftBank just last summer. The proposed Sprint and T-Mobile merger would end up being a major deal between the companies’ parent companies, SoftBank and Deutsche Telekom. The Journal report states that unnamed “people familiar with the matter” believe that these parent companies have already been in talks about a possible merger of their U.S. mobile providers.
Despite skepticism from the U.S. government, it appears that the companies involved are still ironing out a possible deal. The Journal reports that all four companies are attempting to structure a deal that could pass regulatory muster with the Department of Justice. That may be a difficult task to accomplish, as seen in AT&T’s failed purchase of T-Mobile in 2011. The fallout from that deal provided T-Mobile with $4 billion worth of cash and spectrum that helped the struggling carrier compete with a faster rollout of its data services across the U.S. A similar breakup fee for a U.S.-blocked Sprint and T-Mobile merger would likely leave T-Mobile in an even better competitive position .