Regulators would challenge a Sprint, T-Mobile merger

Last week, media reported that Sprint was preparing a $20 billion bid to buy T-Mobile, the American subsidiary of Deutsche Telekom. This week, the consensus of opinion seems to be that this effort is unlikely to pass regulatory muster, according to what Telecompetitor calls “an informal poll that included three former FCC chairmen and other former FCC officials.”

Analysts at Stifel research wrote that even if the deal is completed, “we believe the DOJ Antitrust Division would likely end up filing a complaint to block a combination of Sprint and T-Mobile, the Nos. 3 and 4 carriers in the already concentrated wireless market.”

The DOJ, said Stifel, had filed a statement in April, 2013 with the FCC in which they had laid out its vision for the wireless industry. Antitrust division’s Assistant Attorney General William J. Baer wrote:

“In its recent merger reviews the [DOJ] has found that the four largest wireless carriers (AT&T, Verizon, Sprint, and T-Mobile) compete across many dimensions, including coverage, network speed, network technologies, and price.”

In short, the DOJ wants four major competitors.

Moreover, Tom Wheeler as FCC chair has “made ‘competition, competition, competition’ his mantra,” said Stifel. “So, we believe Sprint/T-Mobile would struggle to convince Chairman Wheeler that their combination would be in the public interest, especially at this time.”

Expert Poll: A Sprint/T-Mobile Merger Unlikely To Be Approved (telecompetitor, Dec. 16, 2013)
 
We Believe a Sprint/T-Mobile Merger Would Likely Run Into DOJ/FCC Opposition (Stifel, Dec. 15, 2013)