T-Mobile And Sprint Begin Court Battle To Defend $26 Billion Merger by Sergei Klebnikov-Forbes Staff

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  • T-Mobile And Sprint Begin Court Battle To Defend $26 Billion Merger by Sergei Klebnikov-Forbes Staff

Dec 9, 2019

Topline: The fate of T-Mobile’s $26 billion mega-merger with Sprint, which would drastically
change the nature of the U.S. wireless industry, will be decided in an unprecedented trial that
kicks off on Monday, as the company attempts to fight off a challenge from state attorneys
general aiming to prevent the blockbuster deal.

  • A coalition of state attorneys general, including New York’s Letitia James, are suing to block
    the $26 billion T-Mobile and Sprint merger on the basis that it will hurt competition and lead
    to higher prices for U.S. consumers.
  • Federal antitrust officials appointed by President Trump approved the deal in July, in part
    thanks to T-Mobile’s unusual commitment to create a brand-new cellphone carrier in a deal
    with satellite-TV provider Dish.
  • In an unprecedented twist, 13 different states and Washington, D.C., rejected the settlement
    and are now attempting to block the mega-merger in court, without any involvement from
    federal authorities.
  • Not only would the $26 billion deal lower the number of national wireless carriers from four
    to three, but it would also boost T-Mobile to the second-largest carrier in the U.S., above AT&T.
  • T-Mobile has argued that the mega-merger would be good for competition and would allow
    them to team up with Sprint to create a better 5G network around the country, as well as
    creating cost savings that would let it keep prices for consumers low.
  • The trial is expected to last several weeks, with testimony from executives like Sprint
    Chairman Marcelo Claure, who is also heading WeWork’s turnaround efforts, and longtime
    T-Mobile CEO John Legere, who is set to step down as chief executive next year.

Crucial statistic: As the company gains new customers, T-Mobile shares have risen slightly over
the last six months. Sprint stock, on the other hand, has fallen over 20% over that same period,
amid departing subscribers and uncertainty over the megamerger’s fate.

Key background: The T-Mobile and Sprint megamerger would create a massive wireless carrier
on the scale of AT&T and Verizon, who each serve around 100 million domestic customers apiece.
T-Mobile, which is owned by Deutsche Telekom AG, and Sprint, which is majority controlled by
Japan’s SoftBank Group, originally announced the merger plans in April 2018.

What to watch for: Dish cofounder and chairman Charlie Ergen, who Forbes estimates is worth
$10.1 billion, is also expected to take the stand at trial. The coalition of attorneys general seeking
to block the T-Mobile and Sprint merger will likely attack Ergen’s history of allegedly broken
promises to the government and question whether Dish is capable of replacing Sprint as the fourth-
largest cellphone company in the U.S, according to the New York Post. As part of the Justice
Department’s settlement with T-Mobile and Sprint in July, both companies made concessions to
get the deal approved, namely giving satellite-TV provider Dish tools to create a new cellphone
 from the ground up.









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