States to file a lawsuit
On Tuesday, ten states sued to block Sprint’s (S) and T-Mobile’s (TMUS) proposed merger on antitrust grounds, pulling down their stocks. Sprint stock fell ~6% on the news and closed at $6.58 on June 11, and T-Mobile stock fell ~1.6% to $75.46.
T-Mobile has gained the most this year among telecom peers, rising by 18.5% as of June 12. Sprint has risen 13.9%. The top two US telecom carriers, Verizon and AT&T (T), have gained 4.2% and 16.5%, respectively, whereas Frontier (FTR) has fallen 37.4%.
Sprint, the fourth-largest US wireless carrier, is ready to merge with the third-largest carrier, T-Mobile, for $59 billion (including debt). The merger, essential for the companies to grow their customer base amid intense competition from peers and online rivals, could help the companies widen their scale, cut costs, and expand their 5G network.
However, the deal is facing regulatory hurdles, as the merger could harm competition and raise prices for wireless users. This lawsuit may delay the merger, which is expected to close by the end of July.