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Will T-Mobile and Sprint Ever Unite?

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Antitrust questions raised

A year ago, T-Mobile (TMUS) and Sprint (S) agreed to merge in an all-stock deal that valued the latter at ~$26 billion. Although the companies have secured some of the regulatory approvals necessary to close the deal, a recent report from the Wall Street Journal has suggested that antitrust concerns at the US Department of Justice could sink the merger.

According to the report, Justice Department staff in the antitrust office have raised questions about approving the T-Mobile–Sprint merger proposal as it’s currently structured. The Federal Communications Commission is also reviewing the merger proposal. The companies may be required to sell certain assets as a condition to their merger deal being approved by federal regulators.

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T-Mobile and Sprint controlled by foreign companies

In December, the T-Mobile–Sprint merger proposal won approval from the Committee on Foreign Investment in the United States, the federal agency that reviews merger transactions involving foreign companies. T-Mobile is majority owned by Germany’s Deutsche Telekom (DTEGY), whereas Sprint is controlled by Japan’s telecommunications major SoftBank (SFTBF).

T-Mobile and Sprint have previously tried to merge, including under the Obama administration, without success. In April 2018, they finally agreed to unite, apparently betting that the Trump administration would be more open than the previous administration to consolidation in the country’s telecommunications sector.

T-Mobile made $640 million in profit

T-Mobile and Sprint have told regulators that they need to join forces to better compete with their larger rivals Verizon (VZ) and AT&T (T). T-Mobile is so keen to unite with Sprint that it has pledged to invest as much as $40 billion in network developments if the merger proposal is approved.

T-Mobile made a profit of $640 million on revenue of $11.4 billion in the fourth quarter.

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