Report: T-Mobile/Sprint Merger May Face Opposition By DOJ

October 12, 2017 - Written By Daniel Fuller

T-Mobile and Sprint recently put together a tentative plan to merge, but a few anonymous inside sources said that the merger may end up being opposed by the US Department of Justice. According to these sources, who claim to be familiar with the logic and processes inherent in the Department of Justice making these sorts of decisions, a merger between two of the four largest wireless carriers in the United States has serious potential for anticompetitive and consumer-harming behavior, and may be blocked because of it. News outlet Reuters later reached out to seven experts in the niche, and none of them predicted the deal going through smoothly; the group was broken up between participants who said that the deal would likely be blocked, and participants who were unable to make a prediction.

T-Mobile and Sprint hold vast swaths of wireless spectrum that the two could use to make a quicker, cheaper, and wider rollout of 5G than would otherwise be possible. This is a major reason for the proposed merger, but there are a number of other factors that complicate matters. One of those is the fact that the two carriers compete fiercely in the prepaid space, and hold roughly half of that market between the two of them. That means that a merger would give a single entity dominance over prepaid in the US, as one example. This presents the potential for the merged company to control how the market works, giving them the power to dictate expectations and pricing in the space, among other variables.

Early on in President Donald Trump’s time in office, a merger between AT&T and Comcast was approved. This merger between the nation’s second-largest wireless carrier and one of the country’s largest telecommunications and media companies went through with relatively little trouble, showing fairly lax regard for such affairs in the Trump administration. Those two companies were not direct competitors in the same space, which means that how the T-Mobile and Sprint deal is treated may be the one to set the precedent in regards to regulation of antitrust interests like mergers and acquisitions for the rest of the Trump era.