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T-Mobile and Sprint Merger Faces a New Hurdle

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In July, the Department of Justice approved the $26.5 billion T-Mobile (TMUS) and Sprint (S) merger deal. Regulators approved the merger after T-Mobile agreed to divest Sprint’s prepaid business and certain wireless spectrum to Dish Network. However, T-Mobile and Sprint face an antitrust trial in court.

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T-Mobile and Sprint merger lawsuit

On Monday, Oregon Attorney General Ellen Rosenblum joined the lawsuit opposing the T-Mobile and Sprint merger. Currently, the District of Columbia and 15 states want to block the merger of the third and fourth-largest wireless carriers in the US.

According to a Reuters report, “Oregon’s addition to our lawsuit keeps our momentum going, and ensures that there isn’t a single region of this country that doesn’t oppose this anticompetitive megamerger.” The report said, “If left unchallenged, the current plan will result in reduced access to affordable wireless service in Oregon — and higher prices.”

On August 1, Texas Attorney General Ken Paxton joined the lawsuit opposing the merger. All of state attorney generals opposing the merger are Democrats, except for Paxton, who is a Republican. On the same day, a US district court pushed the antitrust trial start date to December 9 from October 7. On July 31, the states asked for a new trial date. They needed more time to scrutinize the deal. Notably, the merger might not close until the states’ litigation concludes.

T-Mobile–Sprint merger concerns

The states’ litigation alleges that the T-Mobile and Sprint merger could reduce competition and increase prices for wireless customers. According to a Reuters report, “The states argue is anticompetitive and will cost their residents more than $4.5 billion annually.”

In the June quarter, Sprint reported an adjusted EPS of -$0.03 on revenues of $8.14 billion. T-Mobile posted an adjusted EPS of $1.09 on revenues of $10.98 billion in the quarter. In the second quarter, T-Mobile gained 710,000 postpaid phone net customers, while Sprint lost a net 128,000 postpaid phone subscribers.

Read Why T-Mobile and Sprint Merger Odds Reach 50% and Does T-Mobile Stock Still Have Upside Potential? to learn more about the merger.

On Monday, T-Mobile closed at $76.94, which was 0.75% lower than its previous closing price. Sprint stock fell 0.88% and closed at $6.75 on the same day.

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