T-Mobile / Sprint merger likely to be rejected by GM

T-Mobile US and Sprint risk being rejected by proposed merger proposal by the US Department of Justice.

DOJ employees "told T-Mobile US and Sprint that it was unlikely that their proposed merger would be approved in its current structure," the Wall Street Journal reported today, quoting people close to the file.

"At a meeting earlier this month, justice ministry staff voiced their concerns over the all-stock transaction and questioned the companies' arguments that the merger would generate Substantial efficiency gains for the new group, "writes the newspaper.

The recommendations of DOJ staff are not the last word of the agency. Makan Delrahim, head of the anti-trust department within the ministry, would decide whether to challenge or allow the merger.

T-Mobile's CEO, John Legere, has denied the Newspaper report, write on Twitter this "

Sprint declined to comment when contacted by Ars. As a general rule, DOJ does not publicly comment on current merger reviews.

The antitrust division of the Department of Justice is currently reviewing the merger and could take legal action in federal court to try to block the transaction. Success is not guaranteed, it is a fact that reminded the DOJ when a US Federal Court judge allowed AT & T to buy Time Warner despite opposition from the DOJ.

The Ministry of Justice could also approve the merger under certain conditions, but this would require an agreement with T-Mobile and Sprint on the nature of these conditions.

"T-Mobile and Sprint could offer concessions, such as the sale of assets, to address government concerns," the newspaper writes.

Sprint's shares "are trading at a discount of about 20% over the implied price resulting from the all-stock transaction, highlighting Wall Street's doubts about the chances of this combination," the report also said.

T-Mobile has spent at least $ 195,000 at President Trump's hotel in Washington, while lobbying for Trump's administration to approve the merger.

Merger would reduce competition

The T-Mobile / Sprint agreement would reduce the number of mobile operators nationwide to four to three, which would limit the choice of customers in the United States. T-Mobile and Sprint are smaller players in a market run by Verizon and AT & T, but T-Mobile has grown significantly in recent years with more user-friendly operations than the two largest operators.

T-Mobile and Sprint began their merger campaign a year ago claiming that neither company could build a robust 5G network while operating alone. But the companies' previous statements about their 5G projects contradicted these claims, and government officials did not seem impressed by the 5G's argument.

T-Mobile unveiled a home-based Internet service last month, while claiming that it can only be significantly expanded if the government approves the merger.

The Federal Communications Commission is also reviewing the agreement and has not yet announced its approval. In addition to federal agencies, states are currently reviewing the merger and could take legal action even without the assistance of the DOJ.

"The different groups of government officials are working in similar deadlines and a final decision is probably still in several weeks," writes the Journal.