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DOJ says states have no business trying to block T-Mobile-Sprint merger

DOJ says states have no business trying to block T-Mobile-Sprint merger
Makan Delrahim, the head of the Justice Department's antitrust division is concerned about the lawsuit filed by several state attorneys general that seeks to block the $26.5 billion merger of T-Mobile and Sprint. The plaintiffs argue that by reducing the number of major U.S. carriers by 25%, the remaining wireless operators will be able to raise prices more easily. There are a number of reasons why this is not true and we will explore them later in this article.

According to Bloomberg, Delrahim is concerned that by trying to put the kibosh on the merger, the states are diverging from federal regulators and are trying to block the deal on their own. The FCC and the DOJ are the two main federal regulatory agencies that needed to sign off on the transaction and both have done so. T-Mobile persuaded the FCC to give the merger a thumbs up by promising to cover 97% of the country (85% of rural America) with low-band 5G signals within the first three years after the merger closes. The carrier also said that during the same time period it would cover 75% of the U.S. with 5G signals; this would be accomplished by employing the 2.5GHz mid-band airwaves it would acquire from Sprint. Among other promises made, T-Mobile told the FCC that within the first three years after the merger closes, 63% of its customers in the states will be able to access download data speeds of 100Mbps or faster verifiable through a drive test.

Justice Department's antitrust chief says that the states should not be allowed to muck up a "national settlement"


To placate the DOJ, Sprint agreed to sell Dish Network its prepaid businesses for $5 billion in an attempt to turn the satellite television provider into a replacement for Sprint. Dish will also receive 9.3 million customers, 7,500 retail locations, 400 employees and 14MHz of 800MHz spectrum. It also will sign a seven-year MVNO agreement with T-Mobile that will allow Dish to start selling wireless service under its name while it builds a standalone 5G network.


Delrahim made a speech in Washington, complaining that if the states are allowed to block a national settlement from going through "that will wreak havoc on parties' ability to merge and the government's ability to settle cases, and cause real uncertainty in the market for mergers and acquisitions." During the speech, Delrahim said that his argument isn't that states shouldn't have the ability to enforce merger laws. The point of his argument is that the courts shouldn't block a deal or agree to a settlement that is "incompatible with the relief secured by the federal government."

Sometime this month, Judge Vincent Marrero will announce his decision. During the bench trial (no jury was present), former Sprint CEO Marcelo Claure testified that if the merger with T-Mobile is blocked, Sprint will have to raise prices. DING! That rings a bell, doesn't it? The outcome of a victory for the states would result in the very thing that they are suing to prevent. And if you can wrap your head around that, another Sprint executive says that if the deal does not get done, Sprint might have to shut its doors. DING! The states are concerned that if the merger goes through, Sprint will disappear reducing the number of major U.S. carriers to three. But here is a Sprint executive who says that the same thing could occur if the states are successful in blocking the merger. And frankly, we can't imagine that Judge Marrero doesn't see this either.

The spread between the theoretical value of Sprint if the deal were to be approved and the actual value of the company's stock right now has ballooned to $3.82. The higher this spread, the more skepticism on Wall Street that the deal will close in its present form. On January 2nd the spread was $2.84 after hitting a low of 53 cents just one month after the deal was announced on April 29th, 2018.

Besides the lawsuit filed by the state attorneys general, the merger needs to be approved by California's Public Utility Commission and the deal between Sprint and Dish that the DOJ gave thumbs up to must be reviewed by Judge Thomas Kelly under the Tunney Act. The latter calls for an independent review of any agreement made by the Justice Department to make sure that it is in the public interest.

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33 Comments

34. diyi75

Posts: 73; Member since: Oct 30, 2013

In no way going from 4 carriers to 3 is a good idea. Dish is the company that should've bought sprint. They will not be able to retain every customer during this merger. Att & VZ will have a flash sale/promotion to suck in pissed off customers. Sprint nextel all over again.

30. TheOtherStreet

Posts: 1; Member since: Feb 07, 2020

Totally political, but the merger will occur. Noticed how President Trump emphasized hi speed internet to rural communities in SOTU. Bingo. Also, this needs to be updated, but Masayoshi Son did promise he would create 10,000 jobs in the US. Maybe less because of WeWork, still.

21. tsunsami

Posts: 6; Member since: Jan 12, 2020

A good indication that Judge Marrero will also sign off the merger because the evidences were too great to be tossed out.

19. VZW4LIFE

Posts: 42; Member since: Jun 11, 2011

Damn Libtarded State AGs... They're not opposing the merger out of concern for American people. They're doing it because Tmobile Executives stayed at Trump's Hotel earlier in the merger process. They oppose anything with Trump's scent on it regardless of if it's good for the economy & the people!!! Sprint's a sinking ship! If Sprint isn't allowed to merge with Tmobile, Dish or someone else needs to buy it, get rid of the Sprint name, rebuild a new company from the ground up!

3. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

Well if the DOJ did their job and blocked the merger, states wouldn't be stepping up. AT&T tries to buy TMO *DOJ, block.* Sprint tries to buy TMO *DOJ, block* TMO tries to buy Sprint *DOJ, hmm alright*. America needs 4 carriers not 3. And no, an MVNO is not a replacement for a 4th carrier

7. talon95

Posts: 1015; Member since: Jul 31, 2012

You don't know what you're talking about. Sprint is already dead. TMO needs spectrum to complete. You think there are 4 carriers but there are only 2 that count, now there will be 3. Who do you work for? Verizon?

8. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

AT&T used the same argument when they tried buying TMO. Claimed Verizon was too powerful and they needed TMO to compete. Guess what? That wasn't true. TMO was once behind US Cellular in terms of size and subscribers and now they're number 3. So you really don't know what you're babbling about.

10. Venom

Posts: 4137; Member since: Dec 14, 2017

AT&T isn't in the risk of dying unlike Sprint. AT&T buying T-Mobile would have killed the only other GSM carrier in the US.

12. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

Okay and your point? Let them die. Dish can buy Sprint and become a real 4th carrier. Problem solved.

14. Venom

Posts: 4137; Member since: Dec 14, 2017

17. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

Here's a cookie.

23. Venom

Posts: 4137; Member since: Dec 14, 2017

You're welcome.

25. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

I didn't say thanks?

28. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

I give you a cookie because you successfully made a Google search. To an article from 2013.... meaning it's no longer relevant but clearly that went over your head lol

24. integrazimmy

Posts: 65; Member since: May 30, 2015

Big difference is that in previous situations, no company was struggling like Sprint is struggling. This is simple to understand, even for a simpleton like yourself, right? And please answer this question... What would you call the prices upon which Sprint goes out of business? Going from 4 to 3, right?

26. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

Let them struggle. Makes it easy for Dish to purchase Sprint if they end up getting worse financially

13. TheTruthSayer

Posts: 3; Member since: Jan 23, 2020

That's laughable, because America needs strong carriers not weak ones. This obsession with quantity over quality is ridiculous, and it's always been a bad philosophy for this country which has led to some of our worst positions imaginable.

18. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

Uh. Okay?

29. middlehead

Posts: 488; Member since: May 12, 2014

The intent of the Dish requirement IS to make a 4th carrier. The MVNO agreement is for them to piggyback on TMobile long enough to build out their own network.

31. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

Which is a laughable idea

32. TenEightyPee

Posts: 1; Member since: Mar 31, 2017

No... we don't "NEED" 4 carriers. Hell... we used to have a lot more... and they all weren't national carriers. Sprint, Nextel, T-Mobile, Verizon, Alltel, AT&T Wireless, Cingular, US Cellular... etc... Also... notice the examples you gave... AT&T T-mobile would be bad, because AT&T is already a juggernaut. T-Mobile and Sprint cannot compete effectively against AT&T and Verizon without each other. Giving T-Mobile the spectrum that Sprint owns will allow them to jump ahead in the 5G game.. this bringing it as a form of broadband to communities that currently do not have access. Also... the previous merger denials were by Democratic administrations.... who just hate big business alltogether

33. D.Aceveda

Posts: 456; Member since: Jun 30, 2012

You're just as crazy as all the other nuts who think the American people will be better off with less carriers and less competition.

1. Eclectech

Posts: 364; Member since: May 01, 2013

If the merger is blocked, Sprint will continue to compete because they have to in order to retain customers. Also, they will not be going out of business because they are owned by deep pockets SoftBank which would surely find another buyer before they lose money on an investment of that size. Sometimes you just have to cut thru the BS to get to the truth.

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