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DoJ Sending 'Increasingly Ominous Message' to Sprint, T-Mobile

February 01, 2014 - News

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Even if Sprint does pursue its reported courtship of T-Mobile USA, a combination is expected to face government resistance that even could go so far as to dissuade the providers from trying to merge.

That's according to analysts at investment firm Stifel, writing about this week's speech by the Department of Justice's top antitrust official, William Baer.

Indeed, a Sprint-T-Mobile pairing seems less likely, wrote Christopher King and David Kaut.

"If Sprint and T-Mobile try to merge and the DOJ opposes them, the companies will not be able to say they weren’t warned, in our opinion," the analysts wrote. To be sure, the DoJ's remarks are not looking good for Sprint and T-Mobile, they said.

That's due in part to the agency's desire to have four wireless providers competing in the United States.

"We believe DoJ has been sending an increasingly ominous message about a possible Sprint-T-Mobile merger, starting with broad DoJ comments last year about preferring a wireless market with four national carriers," Kaut and King wrote. "After reports later surfaced and continued that SoftBank/Sprint was exploring a T-Mobile bid, another DoJ antitrust official last week gave a speech citing innovation as critical in tech merger reviews and noting DoJ concerns about deals, including AT&T-T-Mobile, that would take out a 'particularly innovative or disruptive competitor'."

Baer in a speech this week hailed T-Mobile as disruptive and innovative but did not specifically mention the potential Sprint deal. Of course, Sprint and T-Mobile have not confirmed the swirling industry rumors that they are trying to combine.

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