States opposing $26bn Sprint/T-Mobile deal to put final arguments to judge

Sprint T-Mobile.jpg

A US judge will hear the closing arguments tomorrow in a court case that is likely to be the final act in the long-running $26 billion Sprint/T-Mobile merger drama.

US federal government authorities have approved the merger, which is set to create a merged operator worth $146 billion, but this case was brought by the senior law officers of leading states including California and New York. Sprint, owned by SoftBank, and T-Mobile US, owned by Deutsche Telekom,announced their planned merger 21 months ago

In that case, which started in December and will draw to a close tomorrow, the states are saying that the merger will harm consumers by reducing the US mobile market from four players – AT&T, Verizon, T-Mobile and Sprint – to just three.

It is not known how long the judge hearing this case, Victor Marrero, will take to come to a decision. Michel Combes, CEO of Sprint (pictured left), has told employees that they may have “to wait at least a few weeks, possibly longer”.

As a concession to the federal government, Sprint has agreed to sell spectrum and an access deal to Dish Networks, a satellite TV company, so that it can enter the mobile market. Both the Department of Justice (DoJ) and the Federal Communications Commission (FCC) have approved the merger.

The attorneys general of the states – plus the District of Columbia – are claiming that Dish won’t replace Sprint in the competitive market. They submitted: “Only a small fraction of the merged company’s assets will be sold to Dish; Dish has no experience in the wireless market and a history of broken promises; and Dish will be dependent on the new T-Mobile’s network and will lack the scale needed for long-term success as a national wireless provider.”

T-Mobile and Sprint have argued that by combining they will be creating a viable competitor – also to be called T-Mobile – for AT&T and Verizon.

Meanwhile the DoJ has appointed a lawyer, Ted Ullyot, to supervise the merger if it goes ahead. Ullyot worked for AOL when it merged with Time Warner nearly two decades ago, and was general counsel at Facebook from 2008 to 2013. For the past five years he has been a partner at venture capital firm Andreessen Horowitz, leading its policy and regulatory affairs group.