Fate Of Sprint/T-Mobile Merger Hangs In Balance As Trial Ends
U.S. District Judge Victor Marrero will come to a decision ‘as soon as possible’ on the Sprint/T-Mobile $26.5 billion mega-merger.
Sprint and T-Mobile made their final arguments as to why they should be allowed to join forces in a U.S. District Court on Wednesday following a month-long legal battle pitting the two carriers against a group of states that remain staunchly against the $26.5 billion mega-merger.
Officials from 13 states and the District of Columbia, led by New York Attorney General Letitia James, as well as lawyers for Sprint and T-Mobile, made their closing arguments in front of U.S. District Judge Victor Marrero in New York City on Wednesday. Judge Marrero said he would come to a decision “as soon as possible,” but did not offer a public timeline.
Bellevue, Washington-based T-Mobile and Overland Park, Kansas-based Sprint announced their intent to merge nearly two years ago in April 2018. Both sides -- the carriers and the group of states suing to block the deal -- remain confident they will come out on top.
The two companies in July received approval from the U.S. Department of Justice (DoJ) under certain conditions. The combined company would have to divest Sprint’s prepaid businesses and Sprint’s 800 MHz spectrum assets to satellite TV provider Dish Network. After the deal closes, the companies must provide Dish wireless customers access to the new company’s network for seven years and offer standard transition services arrangements to Dish during a transition period of up to three years.
In October, the $26.5 billion merger received approval from the Federal Communications Commission (FCC). The FCC's permission was granted on the conditions that Sprint would promise to deploy 5G service to cover 97 percent of the American people in three years and within six years to reach 99 percent of all Americans. Both companies also pledged that 90 percent of Americans would have access to mobile service with speeds of at least 100 Mbps and 99 percent of Americans would have access to speeds of at least 50 Mbps within six years. The companies would be on the hook for payments that could reach over two billion dollars if they do not meet their commitments within six years, the FCC said.
But the merger was then immediately challenged by 15 states, including the District of Columbia. The group of states suing today, including New York and California, argue that the merger between the third and fourth-largest carriers will hurt competition and lead to higher prices for consumers. Glenn Pomerantz, the lead counsel for the states, called the merger "presumptively anticompetitive" in his closing remarks and said that the merger's conditions being imposed by the FCC and DoJ are not sufficient.
CRN reached out to Sprint and T-Mobile for comment on the trial ending but did not hear back before publication. T-Mobile's current COO Mike Sievert earlier this month said that “right is on our side” regarding T-Mobile’s effort to win the lawsuit and merge with Sprint. Sievert, who will be taking over for John Legere as CEO of T-Mobile when Legere's contract runs up in April, also said that T-Mobile has a couple of back-up plans if the merger is ultimately denied.
This is Sprint and T-Mobile's third merger attempt. The latest deal was preceded by a negotiation process that has lasted for more than a year before terms were reached by the two wireless companies' parent companies; Japan’s SoftBank Group Corp. which owns more than 80 percent of Sprint’s shares and Deutsche Telekom AG, which owns T-Mobile.