Fate of the T-Mobile-Sprint merger rests on a trial that begins tomorrow
Tomorrow, December 9th, a trial begins in a Manhattan courtroom that will determine the fate of the T-Mobile and Sprint merger. 13 state attorneys general and the AG of Washington D.C. are seeking to block the $26.5 billion deal that was first announced on April 29th, 2018. The state attorneys general are concerned that the transaction is anti-competitive because it reduces the number of major U.S. carries by 25% to three from four. The plaintiffs don’t believe that the deal in place between T-Mobile, Sprint and Dish Network that turns the latter into a “fourth nationwide facilities-based network competitor,” will keep competition at the level where it currently stands.
The merger has always been about T-Mobile getting its hands on Sprint’s 2.5GHz mid-range spectrum
The transition from 4G LTE to faster 5G data speeds is also expected to be brought up during the trial as T-Mobile and Sprint explain that the merger will allow the former to build a broader, more complete 5G network that will be better positioned to deliver faster 5G data speeds to rural Americans. The combination of T-Mobile’s low-band 600MHz spectrum and Sprint’s mid-band 2.5GHz spectrum will provide two-thirds of Americans with download data speeds of more than 100Mbps by 2021, rising to 90% by 2024.
T-Mobile and Sprint announced the merger on April 29th, 2018
If the court rules against T-Mobile and Sprint, some expect other companies to make a play for Sprint or T-Mobile independently. Ironically, Dish Network is one of the names that come up as a potential bidder as does Altice USA, the nation’s fourth-largest cable outfit.
New Street Research analyst Blair Levin sees a victory ahead for T-Mobile and Sprint. “While we see the odds as close, our current view [is] that the states are more likely than not to win, particularly due to weaknesses we see in the companies’ market definition, reliance on economic arguments with little support in antitrust precedent, a reliance on behavioral remedies to justify the fix, and a reliance on public interest considerations, such as social or industrial policy, that generally are considered irrelevant to competition analysis, “Levin wrote to clients. “Having said that, we could see the Judge accepting a number of arguments from the companies and ultimately ruling their way, including by fashioning his own remedies.”