T-Mo/Sprint Merger Chances Drop As Republicans Fear Embarrassment: Analyst

Advertisement
Advertisement

The likelihood of T-Mobile and Sprint's proposed merger being approved by the Department of Justice is growing slim and one doesn't need to look further than the companies' own recent statements to reach the same conclusion, wrote MoffettNathanson analysts this week.

A straightforward tell

One of the most high-profile industry watchers changed their prediction of the attempted tie-up, downgrading its chances from 50- to 33-percent, pointing to what they deem is a couple of "Hail Maries" on T-Mobile's part. That's how the analysts described T-Mobile's recent commitment to make broadband Internet available in rural America via 4G-based fixed wireless and freeze all service prices for three years if the merger is approved.

Advertisement

The Bellevue, Washington-based network operator made both promises publicly and with no apparent involvement from federal regulators, which MoffettNathanson seems as an extremely discouraging sign for anyone hoping to see the consolidation greenlit.

T-Mobile and Sprint are presently navigating through a late stage of regulatory approvals and antitrust probes, a highly unconventional time for any new grand concessions being introduced, yet the self-proclaimed Un-Carrier resolved to bring two more into the fold in a matter of days. Not straying beyond the Occam's razor principle, the moves were largely triggered by a private regulatory signal suggesting the tie-up's chances of being approved are decreasing.

No one is in the business of avoiding to make the most money legally possible, least so one of the four national carriers in the United States; by making the said two pledges out of the blue, T-Mobile gave a clear signal it knows something the public doesn't – something that's far from ideal for its ambitions to continue growing in an aggressive manner.

Advertisement

The analysts concluded their latest wireless prediction with a rhetorical question: "when was the last time you saw a Hail Mary pass from a team that was ahead?"

High national-embarrassment potential

Recent media reports and insider claims suggest certain state officials are considering suing for the deal to be blocked even if the DOJ gives it the go-ahead. In doing so, they would start a chain of events that would likely result in a public trial which would see them successfully argue their case based on nothing else but the DOJ's own rulebook from 2010.

Advertisement

Adding AT&T's failed attempt to acquire T-Mobile which the DOJ formally opposed in 2011 and the government agency's failed lawsuit against AT&T's purchase of Time Warner from last year, there's plenty of precedents to go around when it comes to putting together a case against T-Mobile and Sprint being allowed to combine, most industry watchers agree.

Due to that state of affairs, the DOJ is likely to reject the merger proposal solely to avoid being dragged into the court of law by some state-level administration or an activist group, the analysts opinioned.

In that scenario, T-Mobile and Sprint would likely sue to attempt forcing the issue but their chances of succeeding would be next to none; the Trump administration and the Republican Senate presently want to avoid any move that would generate bad publicity associated with anti-consumerism and with the DNC's influence in Washington now once again being on the upswing, it's unlikely the political climate in the U.S. will be anywhere close to conducive to big-business tie-ups anytime soon.

Advertisement