The long-pending merger between telecom firms T-Mobile (Nasdaq: TMUS) and Sprint (NYSE: S) suffered a fresh setback this week after more US states joined the lawsuit seeking to quash the deal. While negotiations between the companies and the Department of Justice (DoJ) over asset sales are progressing, sources close to the matter revealed that four more US states raised opposition against the deal, citing competition issues.
The latest developments signal that the DoJ’s verdict on the $26-billion deal, which is being closely followed by the business world, will be delayed further. Meanwhile, it is learned that the two sides have moved closer to an agreement on the modalities for divesting assets to become compliant with the antitrust norms.
The lawsuit was filed recently by a group of states – New York, California, Colorado, Maryland, Michigan, Mississippi, Connecticut, Virginia, and Wisconsin – claiming that the coming together of the two leading telecom firms would not be in best interests of most stakeholders, especially consumers. The latest to join the case are the states of Hawaii, Massachusetts, Minnesota, and Nevada.
The lawsuit was filed by a group of states claiming that the coming together of the two telecom firms will eliminate competition
The trial in the lawsuit is tentatively scheduled to begin on October 7 and last for a couple of weeks. The plaintiffs allege that Germany-based Deutsche Telekom, which owns T-Mobile, is promoting consolidation in the telecom sector with the intention of eliminating competition and making financial gains at the expense of consumers.
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It was a few weeks ago that the deal ran into serious trouble after regulators took a harsh stance. Originally scheduled for completion in the first quarter of this year, the merger was moving closer to materialization at that time, after overcoming a series of adversities.
Together, T-Mobile and Sprint cater to more than 50% of the country’s pre-paid wireless market, where the majority of the customers are middle class. It has been more than a year since Deutsche Telekom signed an agreement to acquire Sprint to expand operations so as to compete effectively with rivals AT&T (T) and Verizon (VZ).