A report published by the Wall Street Journal has poured cold water over the hot rumor that Sprint will merge with T-Mobile. Apparently, top executives from Sprint visited the Justice Department and the FCC in Washington recently, where they tried to sell the prospect of a merger. However, nobody on the other side of the table was buying, the report indicates.
Antitrust officials “expressed strong sentiments against a deal,” leaving the Sprint entourage, which included CEO Dan Hesse and Softbank Chairman Masayoshi Son, “surprised by the level of opposition.”
The negative reception is in part due to the FCC and the Justice Department’s belief consumers are better off with four major network providers competing, rather than just three. According to an analyst quoted in the WSJ’s piece, neither department will approve a deal, and would prefer one not be put forward at all.
Sprint and T-Mobile left the meeting “to ponder strategy,” but they could still pursue a deal. If they do, it could result in a repeat of the actions taken in 2011, when AT&T’s $39 billion acquisition of T-Mobile was blocked. Ironically, Sprint was also instrumental in that deal not going through.
At the moment, any talk of a T-Mobile and Sprint merger is speculation because no official statement has been released. The argument for the deal is based on AT&T and Verizon’s almost complete control of the U.S. wireless market, and that rather than losing a competitor should Sprint and T-Mobile join forces, the market would instead gain a challenger with the ability (and financial might) to truly compete.
However, the poor reaction to these preliminary talks may prevent us from ever finding out which viewpoint ends up being accurate.
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