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What’s Holding Up the Sprint-T-Mobile Merger?

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T-Mobile and Sprint merger

Telecom giants T-Mobile (TMUS) and Sprint (S), the third- and fourth-largest US wireless service providers (SPY), are seeking to merge. The merger was first discussed in 2014 but has not materialized due to regulatory challenges. The combined entity would aim to have a stronger customer base, improved 5G[1.fifth-generation] network, and cost synergy. Sprint had a wireless customer base of 56.5 million at the end of December.

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Merger hurdles

The US Department of Justice and the Federal Communications Commission (or FCC) are concerned about the planned $26.5 billion merger reducing the number of wireless carriers in the country from four to three, including Verizon (VZ) and AT&T’s (T) newly merged company, impacting competition in the wireless market.

According to CNN, the FCC stated in September that more time was needed to review the details of the merger. MoffettNathanson analyst Craig Moffett has estimated the merger’s probability of being approved at 50-50, while Wells Fargo analyst Jennifer Fritzsche has set it at 70%. T-Mobile is confident the additional review will be beneficial. As reported by Reuters, DealReporter stated on Wednesday that New York and 17 other states’ attorneys general are preparing to oppose the deal.

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