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Justice Department Skeptical of Sprint/T-Mobile Deal

by Todd Haselton | January 29, 2014January 29, 2014 8:00 am PST


There’s been plenty of chatter that Sprint is considering a bid to buy T-Mobile in an effort to better compete against AT&T and Verizon Wireless in the United States. However, any such deal would be under the scrutiny of U.S. regulators, as was the case when AT&T tried, and ultimately failed, to acquire T-Mobile. According to The Wall Street Journal regulators aren’t too keen on the idea.

Apparently Sprint CEO Dan Hesse and SoftBank CEO Masayoshi Son – remember Japanese carrier SoftBank now owns 80 percent of Sprint – recently sat down with the Justice Department to get a feel for how an acquisition of T-Mobile might go over. The response wasn’t positive, and the deal was met with “skepticism” according to The Wall Street Journal.

While Sprint has already learned it can raise enough cash for the deal, it still has to iron out other details with T-Mobile, like how much it will pay the smaller carrier if the deal falls through. T-Mobile used the cash from its failed deal with AT&T to build out its 4G LTE network. The Justice Department could still ultimately approve a transaction, too, and apparently some execs came away from the meeting without being too deterred. Justice Department officials are “usually are careful not to signal their views on a deal too strongly before giving it a full review,” The Wall Street Journal explained.

The Justice Department will be most concerned about making sure that there aren’t any competition concerns. Still, there’s likely also a concern about handing over so many wireless subscribers to a foreign company (though Deutsche Telekom owns more than half of T-Mobile already). The quicker T-Mobile grows its subscriber base, however, the more likely regulators may think the company is fine standing alone.

Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...