Why a Sprint, T-Mobile merger could hurt your wallet

Would the proposed Sprint/T-Mobile lead to higher prices for consumers?

Former Boost Mobile USA CEO Peter Adderton on the proposed Sprint merger with T-Mobile and the state of the media sector.

As telecom giants T-Mobile and Sprint head to Capitol Hill to garner support for their proposed $26 billion merger from lawmakers, former Boost Mobile USA CEO Peter Adderton warned that allowing this deal to go through could have an adverse effect on prices.

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T-Mobile Chief Executive John Legere and Sprint Executive Chairman Marcelo Claure will testify in front of the Senate Judiciary Committee's antitrust subcommittee on Wednesday to explain why they believe the merger won’t hurt competition. Antitrust enforcers at the Federal Communications Commission and the Justice Department, however, ultimately have authority over whether the deal is approved.

If the combination is approved, the two companies will owe more than $75 billion in debt. The wireless carriers have argued that by merging, they’ll be able to better compete with rivals AT&T and Verizon; critics warn it could drive up prices and hurt consumers.

“The nearest competitor that’s supposed to be driving prices is the most indebted company in the world, which is AT&T,” Adderton said during an interview on Wednesday with FOX Business’ Maria Bartiromo. “I can’t see how they’re going to argue that they’re going to lower prices when they’re increasing their debt.”

And it’s not just massive amounts of debt that are troublesome to Adderton. Sprint’s stocks are currently selling for about $5.44 per share -- compared to T-Mobile’s $59.92 per share.

TickerSecurityLastChange%Chg
SSPRINT CORP.7.09-0.13-1.80%
TMUST-MOBILE US INC78.93-0.11-0.14%

“That’s barely a merger,” Adderton said. “That’s an acquisition. That’s T-Mobile effectively buying Sprint.”

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