T-Mobile Us Inc. (NASDAQ:TMUS) and Sprint Corp (NYSE:S) are seeking to merge to form the third-largest national wireless carrier almost the size of AT&T Inc. (NYSE:T) and Verizon Communications (NYSE:VZ). However, several state attorneys general s have opposed the merger, stating that this could worsen wireless services and make it expensive for Americans.
States label T-Mobile and Sprint merger anticompetitive
There has been a month-long legal battle in courts, and the showdown came on Wednesday when the attorneys general and the wireless companies made their final submissions at a New York District Court. The parties made the submissions before Judge Victor Marrero with the state attorneys general saying the deal will be anticompetitive.
Lead counsel for the state Glenn Pomerantz told the court that the remedies put forward to address the effects of the merger were inadequate. This includes some wireless spectrum to Dish Network Corp (NASDAQ: DISH) and divesting of Sprint’s prepaid business. Pomerantz added that if the merger happens, consumers will be at risk of paying more every single year.
David Gelfand, the attorney for T-Mobile and Sprint, told the judge that the companies want to form a new world-class network that offers better services to consumers at low costs. He added that with the merger, there is a huge potential of revolutionizing the industry.
Dish unlikely to be a competitor if it buys Sprint’s business
Dish Network is in consideration to enter the market to remedy the effects of the proposed $26 billion mergers. However, the states argue that as a new entrant, Dish will not provide any meaningful competition.
If the merger happens, then the three wireless companies will each have a market share of around 30%. The states have indicated that it will become easy in such a scenario for the company s to raise prices for consumers than in a situation where small players compete in price. Equally, they indicated that this will be a threat to the consumer-friendly initiatives that the companies have launched in recent times.