The United States Department of Justice is presently leaning toward agreeing with T-Mobile and Sprint’s merger pitch that saw the duo argue a seemingly contradictory point: that fewer wireless carriers will bring more competition to the stateside wireless industry. New York Post reports the DOJ’s antitrust unit has been probing the proposed consolidation for the last three months, citing a source close to the federal agency, though it’s still unclear when exactly could the division officially approve the tie-up.
The move would be largely unprecedented after the same regulator prevented AT&T and T-Mobile from merging in 2011 without even formally declaring its stance on that previous merger attempt, especially in the context of AT&T’s recent purchase of Time Warner, a vertical consolidation that the DOJ has been fighting in the court of law for months and is still in the process of appealing the first-instance ruling that it lost, worrying investors. Unlike AT&T’s purchase, the merger that would leave T-Mobile parent Deutsche Telekom with a controlling stake in the combined entity would eliminate a direct rival from the mobile service industry in the country. The two network giants repeatedly argued that only by combining their forces could they hope to compete with better-funded AT&T and Verizon in the emerging 5G space that requires significant financial commitments.
Critics of that argument, including ex-FCC Chairman Tom Wheeler, are quick to point out that both T-Mobile and Sprint have been touting their individual 5G plans for years, expressing a high level of public confidence that they’ll be able to remain competitive in the 5G era on their own. Others are pointing to the fact that even outside of the 5G segment, the consolidation would leave the prepaid industry with zero major rivalries, hence likely leading to increased prices and lower service quality, consequently hurting prepaid users who are statistically among the poorest Americans in the country. T-Mobile and Sprint are still hoping to have their merger approved in the first half of 2019. Besides the DOJ, the tie-up proposal must also be greenlit by the FCC and could be additionally investigated by the FTC.