Doubts about the merger of T-Mobile and Sprint

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T-Mobile U.S. chief John Legere

US states fear that the proposed merger will increase consumer prices.


(Photo: Reuters)

new York The lawsuit about the planned merger of the Telekom subsidiary T-Mobile with the competitor Sprint on Wednesday filled three courtrooms. Because there was so much interest in the closing pleadings from companies and the states, many lawyers, analysts and journalists had to move to two other rooms.

A total of 13 states and Washington DC have filed a lawsuit against the proposed merger of the US subsidiary of the court in southern Manhattan Deutsche Telekom With sprint complained. They fear that this will increase prices for consumers.

Judge Victor Marrero will have to deliver his verdict in the coming weeks or months. However, investors are already placing their bets: More and more of them believe that Marrero could follow the state’s argument and ban the merger. This is indicated by the Sprint share price. The latter was more than 40 percent below the rate at which the planned share swap valued the share.

T-Mobile and Sprint had already announced their merger in April 2018. The regulatory authorities only approved the merger with conditions: Among other things, T-Mobile and Sprint must hand over their prepaid licenses to the television satellite operator Dish, which is to build a new number four in the market. Dish can also use the T-Mobile network for seven years at extremely favorable conditions.

Glenn Pomerantz, the state prosecutor, repeated in his closing plea that dish chairman and co-founder Charlie Ergen had shown several times that he did not abide by any agreements. “You have to have a lot of trust in Mr. Ergen. But, Your Honor, you shouldn’t do that! ”Pomerantz warned.

T-Mobile needs fusion for 5G expansion

The defenders of the merger, on the other hand, argued that T-Mobile could only build a nationwide, strong 5G network by means of the merger with Sprint, in order to significantly outperform its competitors AT & T and Verizon Paroli to offer.

T-Mobile CEO John Legere, as well as Sprint CEO Michel Combes and Sprint President Michel Combes, appeared on Wednesday’s court hearing. The New York Attorney General Letitia James was among the plaintiffs.

“I see you brought the big calibers,” judge Marrero joked at the start of the appointment. He also jokingly asked if Justice Minister William Barr might also appear, and with that reaped laughter in the hall. Barr had previously argued that the court should abide by the Department of Justice’s competition supervision.

This observation by Marrero is considered by some observers as an indication that the judge could agree with the states. Blair Levin, an analyst at New Street Research, a telecommunications research firm, believes that the reasoning of the states makes sense. Regarding a possible judgment, he says: “This could go in both directions. But I think the states have an advantage. ”

While Sprint stocks have lost value in recent months, T-Mobile stocks have remained relatively stable in recent months. This is also because investors believe that T-Mobile can continue to grow alone if necessary.

More: Read here how John Legere is fighting the merger in court.

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