Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

T-Mobile/Sprint urge court for deal approval, states warn of price hikes

Published 01/15/2020, 11:02 PM
Updated 01/15/2020, 11:02 PM
© Reuters. T-Mobile US Inc CEO John Legere departs a hearing at Manhattan Federal Court in New York City

© Reuters. T-Mobile US Inc CEO John Legere departs a hearing at Manhattan Federal Court in New York City

By Arriana McLymore and Sheila Dang

NEW YORK (Reuters) - A group of U.S. states suing to block T-Mobile US (NASDAQ:TMUS) Inc from merging with Sprint Corp on Wednesday told a federal judge that the deal would raise prices for consumers, while the phone companies pushed back and emphasized they would compete aggressively to push prices down.

The states filed a lawsuit in June to block the merger, saying it would harm low-income Americans in particular.

T-Mobile and Sprint contend that the merger would enable the combined company to compete more effectively with dominant carriers Verizon Communications Inc (NYSE:VZ) and AT&T Inc (NYSE:T).

U.S. District Court Judge Victor Marrero, who will decide the fate of the merger, heard closing arguments in the case on Wednesday. Marrero did not ask any questions of either party and said he would make a decision "as promptly as possible."

Glenn Pomerantz, a lawyer for the states, said that the case would impact at least 130 million customers, since a merger would leave the United States with three major phone carriers instead of four.

"If this merger goes forward, they're at risk for paying billions of dollars more every single year for those services," he said.

When T-Mobile majority shareholder Deutsche Telekom (DE:DTEGn) first contemplated the deal in 2010, it "expressly and unambiguously admitted that it had potential to reduce price competition," Pomerantz said.

David Gelfand, an attorney representing T-Mobile, said in his closing statement that the merger would offer cost savings, which would trickle down to lower prices for consumers.

The U.S. Justice Department approved the deal in July after the carriers agreed to sell some assets to satellite provider Dish Network Corp, which would create its own cellular network to ensure that there would still be four competitors in the market. The Federal Communications Commission signed off on the deal in October.

Executives from the companies, including outspoken T-Mobile Chief Executive John Legere, testified during the trial that Sprint's business was deteriorating and would not survive if it did not merge with T-Mobile.

The carriers argued that selling Sprint's prepaid business and some wireless spectrum to Dish Network Corp would help the satellite TV provider become a mobile competitor and preserve a fourth wireless company in the industry.

The states, led by New York and California, maintained that Dish was ill-equipped to become a competitive fourth wireless carrier, and said Wednesday that Dish lacks experience, scale and brand recognition in wireless.

In rebuttal, Pomerantz emphasized that Sprint could turn itself around the same way T-Mobile had previously when it launched 4G technology.

© Reuters. T-Mobile US Inc CEO John Legere departs a hearing at Manhattan Federal Court in New York City

"They're not in a dire position; they're in an advantageous situation and they just need to invest in their business and compete," he said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.