Published On: Tue, Apr 16th, 2019

Justice Department tells T-Mobile, Sprint it has concerns about merger: sources

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FILE PHOTO: A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration
FILE PHOTO: A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

April 16, 2019

(Reuters) – The U.S. Justice Department has told T-Mobile US Inc and Sprint Corp it has concerns about their $26 billion merger in its current structure, sources familiar with the matter said on Tuesday, although no final decision has been made.

Sprint shares fell about 9 percent after the bell as investors increased bets the deal would not be completed. Shares of T-Mobile fell 4 percent.

The deal had been criticized by consumer advocates and some lawmakers because it would reduce the number of national wireless carriers available to consumers to three from four.

T-Mobile has defended the proposed merger, saying the combined company would be better and faster at building 5G, the next generation of wireless, to compete with industry leaders AT&T Inc and Verizon Communications Inc.

A final decision on the deal is likely near the end of the 180-day Federal Communications Commission review period that expires in June.

T-Mobile US Chief Executive John Legere was in Washington on Tuesday and has meetings later this week at the U.S. Federal Communications Commission, which is also reviewing the deal, two people briefed on the matter said.

Sprint declined to comment. Legere said on Twitter it was “simply untrue,” as had been reported, that Justice Department staff had told the companies the deal was unlikely to be approved in its current form. The Justice Department declined to comment.

A third person familiar with the investigation said the probe was going along as expected, adding there had been no serious discussion of any divestitures of spectrum or other assets and that much of the conversation with regulators had been about proposed efficiencies in the development of 5G.

The agreement to combine the carriers, struck in April 2018, was approved by both companies’ shareholders in October and has received national security clearance, but still needs approval from the Justice Department and FCC. A number of state attorneys general are also reviewing the deal.


Executives from both companies faced tough questions from lawmakers in February about how the companies’ planned merger would affect prices and jobs, especially in rural America.

A group of eight Democratic U.S. senators and independent Senator Bernie Sanders urged the Justice Department and FCC to reject the deal, saying monthly bills could rise as much as 10 percent.

To win support for the deal, T-Mobile had said it would not increase prices for three years and has pledged to use some spectrum for wireless broadband in rural areas.

Legere has also pledged to build 5G without using networking equipment from Huawei Technologies Co Ltd or ZTE Corp, two Chinese telecommunications firms distrusted by U.S. national security experts.

(Reporting by Liana Baker in New York, Vibhuti Sharma in Bengaluru and Diane Bartz in Washington; Editing by Will Dunham and Peter Cooney)

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