Sprint and T-Mobile Merger Might be DOA Before Getting Off the Ground

[dgstorm]

The Wall Street Journal recently reported that The U.S. Department of Justice (DOJ) is not too keen on a merger between Sprint and T-Mobile. According to an unnamed source, a meeting took place between SoftBank CEO Masayoshi Son, Sprint CEO Dan Hesse, and DOJ regulators. In that meeting, the WSJ's sources indicated the DOJ said,

“U.S. antitrust authorities regard the current lineup of four national mobile-phone carriers as important to maintaining a competitive market, and department officials indicated at the meeting that a deal combining Sprint and T-Mobile could face regulatory difficulties.”

If this meeting really did take place and this is the perspective of the DOJ, it shouldn't come as much of a surprise. During the court hearings in which the DOJ and other regulatory agencies where investigating the AT&T and T-Mobile merger a couple of years ago, they made it clear they prefer to have 4 Big carriers competing in the U.S. carrier industry. Over-all, the T-Mobile and Sprint merger might never make it to the finish line. The WSJ went on to say that this might not dissuade SoftBank's CEO Masayoshi Son from trying. The question is, what would he be able to do to make this merger possible.

Source: WSJ

 

[kodiak799]

That 4 is superior to 3 players of equal size seems a bit of an arbitrary distinction. And I'm not anti-trust expert, but I thought it used to be anything less than 80% market share was kosher, and more recently they've taken a more aggressive view of media/access looking at like 60%.

I wonder if Android is entrenched enough now for Google to look at acquiring TMo. You've already got Google Voice and Google Fiber - they aren't going to stay out of the distribution business forever.

 

[johnomaz]

except tmobile and sprint aren't really 'big' compared to att and verizon. So they want to keep two giants and two above average tall companies. Maybe they own stock in att or verizon and want the value to stay nice and high.

 

[kodiak799]

except tmobile and sprint aren't really 'big' compared to att and verizon. So they want to keep two giants and two above average tall companies. Maybe they own stock in att or verizon and want the value to stay nice and high.

That's the point. They have difficulty competing with AT&T and VZW, but a combined company would be about the size of AT&T and VZW, so you'd have 3 pretty equal competitors. I'm not really seeing why that would somehow be worse for competition. VZW and AT&T pretty much lead the market - Sprint and TMo try to trade profit for marketshare but, for the most part, don't impact the other two hardly at all.

I just don't buy the reasoning. Sprint and TMo really aren't that competitive, but a combined company probably could be.

 

[dgstorm]

That's the point. They have difficulty competing with AT&T and VZW, but a combined company would be about the size of AT&T and VZW, so you'd have 3 pretty equal competitors. I'm not really seeing why that would somehow be worse for competition. VZW and AT&T pretty much lead the market - Sprint and TMo try to trade profit for marketshare but, for the most part, don't impact the other two hardly at all.

I just don't buy the reasoning. Sprint and TMo really aren't that competitive, but a combined company probably could be.

I concur with this. Perhaps Mr. Son will be able to convince the DOJ of your same argument...

 

[cybertec69]

If the merger does happen, I say good buy to those unlimited data plans. The more carriers the better it is for the consumer, competition is a good thing.