Officials representing T-Mobile US Inc. and Sprint Corp. say they have not received notice from the United States Justice Department that their planned $26 billion merger would likely be rejected by federal regulators without major refinements, and that they continue to work with government officials to get the deal complete, the FOX Business Network has learned.
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Recent reports have suggested that the DOJ’s antitrust staff have alerted company officials that it is likely the department will reject the deal on the grounds that it would eliminate competition in the wireless market by reducing the number of major carriers. The DOJ staff has reportedly made the announcement during a private meeting earlier this month with officials representing T-Mobile and Sprint.
Regulators are expected to indicate in the coming weeks whether they will approve the merger deal. The two sides met in early April to discuss the merger and what the government is examining. But the DOJ’s staff reached no conclusion and gave no recommendation for making major changes in the combined company in order for the transaction to proceed, according to people involved in the process representing T-Mobile and Sprint.
Telecom executives and the companies themselves acknowledge, however, that regulatory approval is far from a given. As reported by FOX Business, the DOJ’s staff is worried about the potential for anti-competitive behavior given the reduction in wireless carriers. DOJ antitrust chief Makan Delrahim is considered a pro-business advocate, but he also will have to closely study the antitrust implications of the transaction.
The merger of the telecom giants is one of the most closely watched transactions on Wall Street and in Washington D.C. Company officials have tried and failed in the past to get the deal through the political regulatory apparatus of the Federal Communications Commission and the DOJ’s antitrust division during the Obama administration.
But company officials believe they have a better chance of receiving approval from the business friendly Trump administration’s DOJ and FCC. For the past year, company officials have been lobbying the government arguing that the combination of T-Mobile and Sprint would create a much stronger company to better compete with foreign outfits over the development of the superfast 5G wireless technology. The development of 5G is expected to add 3 million jobs and $500 billion to the U.S. economy.
The officials have also argued that the reduction of one major wireless carrier would not impact pricing for consumers because the merger of the new company will still face stiff competition from Verizon and AT&T.
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A T-Mobile spokeswoman declined to comment on the matter, but referred FOX Business to a tweet by T-Mobile CEO John Legere who refuted a Tuesday report on the alleged declining prospects for a deal.
“The premise of this story…is simply untrue. Out of respect for the process, we have no further comment. This continues to be our policy since we announced our merger last year,” Legere stated on Twitter.
The premise of this story, as summarized in the first paragraph, is simply untrue. Out of respect for the process, we have no further comment. This continues to be our policy since we announced our merger last year. https://t.co/3q9CVgkRfv key info: https://t.co/N5YvuuJtPZ— John Legere (@JohnLegere) April 16, 2019
A spokesman for the DOJ antitrust division declined to comment.
A person who represents T-Mobile in the regulatory discussions told FOX Business that DOJ staff acknowledged it continues to examine the companies’ arguments involving the efficiencies the merger would create. Those efficiencies, deal officials argue, would allow the new outfit to cut pricing and not raise antitrust concerns.
“The staff never said anything regarding approval one way or another,” the person said.
Robert McDowell, a former FCC commissioner who now serves as regulatory counsel to T-Mobile told FOX Business, “Just as was reported two weeks ago, there’s still a healthy dialogue between the government and the parties. There is no evidence that any final decisions have been made. This process could continue for several more weeks.”