Justice Department a Potential Obstacle to T-Mobile-Sprint Merger

Mergers & Acquisitions

The proposed T-Mobile/Sprint merger reportedly won’t be approved without major changes, according to the U.S. Department of Justice.

Justice Department staffers have told T-Mobile US and Sprint that their planned $26 billion mega-merger is unlikely to be approved as currently structured, The Wall Street Journal reported on Tuesday. The Department’s antitrust division is considering whether the merger would pose an unacceptable threat to competition.

Sprint’s stock fell 10 percent in after-hours trading following the report. Neither Sprint nor T-Mobile could be reached for comment.

Sprint and T-Mobile have said the merger is necessary to compete with AT&T and Verizon, and that new jobs would be created in the pairing. However, the Communications Workers of America (CWA) has argued the merger would eliminate 30,000 jobs, raise prices on consumers, and “fail to deliver on promises for rural America.”

Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.

Last month, the Federal Communications Commission (FCC) paused its “shot clock” on consideration of the merger in light of new filings and analysis from the two companies. The shot clock resumed April 4.

Protect America’s Wireless, a nonprofit organization of foreign policy and national security professionals, said the Justice Department’s concerns affirm “what the national security community has been maintaining for months: this proposed mega-merger is bad for consumers and would have put our national security at risk.”

“No one in the U.S. wireless industry has a closer relationship to Huawei than T-Mobile,” it said. “T-Mobile’s parent company, Deutsche Telekom, has an entangled and longstanding relationship with Huawei and has worked with them to deploy 5G in infrastructure around the world — even at times siding with Huawei over our closest allies. By blocking this merger, it is clear the DoJ is done with T-Mobile’s vague, unenforceable commitments not to use Huawei, especially given that Deutsche Telekom would own 42 percent of the ‘new T-Mobile.’ It further solidifies that the DoJ is not buying T-Mobile’s nebulous claims that somehow this merger will create more competition to Huawei. The DoJ’s move to end the madness is a critical step to protect our national security and secure United States’ control over our own digital future.”

Last fall, after news of the proposed acquisition broke, Sprint spoke with Channel Partners about its plans to rebrand its indirect channel and offer new service offerings such as its Smart UC solution powered by BroadSoft.

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