Sprint and T-Mobile stocks fall on report that merger could be in trouble
Sprint and T-Mobile have been trying to get married for years. They may have to keep waiting.
The Wall Street Journal reported Tuesday that the US Department of Justice is unlikely to allow the companies’ proposed $26 billion merger to go forward as it’s currently constructed. Sprint’s stock fell as much as 9% after hours on the news. T-Mobile fell about 4%.
The newspaper reported that Justice Department antitrust officials are concerned about the impact the merger will have on competition in the wireless industry.
T-Mobile CEO John Legere said Tuesday that the “premise of this story, as summarized in the first paragraph, is simply untrue.”
“Out of respect for the process, we have no further comment,” he added.
Sprint did not immediately respond to a request for comment from CNN Business on Tuesday. The Department of Justice declined to comment.
The American wireless market is ultra-saturated. Verizon and AT&T, which owns CNN parent company WarnerMedia, dominate the industry. Each has more than 100 million wireless customers. Sprint and T-Mobile combined have fewer than each of its bigger competitors.
That's why the two companies have tried to merge for years. Wireless technology is among the most capital-intensive industries, with annual costs of upkeep and expansion in the tens of billions of dollars. Verizon and AT&T have both launched 5G networks, and Sprint and T-Mobile lag behind. By combining, the companies say they'll pool resources to cut costs and build a 5G network for customers faster.
Sprint and T-Mobile have discussed a merger before. But they scrapped it in 2014 because of concerns about regulatory challenges from the Obama administration.
They began publicly talking about a merger again in 2017 only to announce that they have stopped talking about it later that year. But in April 2018, they announced their latest merger attempt.
Such corporate mergers require approval from a host of different government agencies and regulatory divisions.
The Trump administration has been mostly receptive to mergers and acquisitions, with the notable exception of AT&T's purchase of Time Warner. Earlier this year, the Justice Department lost its appeal of a lower court judge's decision to allow the acquisition, and the Justice Department said it would drop its fight against the purchase.
In December, Sprint and T-Mobile received approval from the Committee on Foreign Investment in the United States, a government panel that vets certain deals involving foreign investors.
At the time, the wireless operators also said the US Departments of Justice, Homeland Security and Defense had withdrawn an earlier request to delay the deal. That decision, however, pertained to potential national security, law enforcement and public safety issues — not antitrust.