Partnerships / Acquisitions

T-Mobile, Sprint Merger Could Be At Risk If DOJ Sues

T-Mobile, Sprint Merger At Risk If DOJ Sues

The Department of Justice (DOJ) may file a lawsuit to block the merger of telecom giants Sprint and T-Mobile if the two parties can’t reach a settlement by next week, according to reports.

Last month, some U.S. state attorneys general got together and filed a lawsuit to block the merger, saying that the cost to consumers – $4.5 billion a year – was too great. The DOJ was not involved in that particular suit.

Sprint and T-Mobile both agreed to some concessions, like selling off certain brands, including prepaid brand Boost, and selling other assets to Dish Network, which would allow the satellite TV company to move into the mobile space and essentially become a fourth telecom provider.

The deal, however, is stalled over issues of who would be able to buy the divested assets if they get sold again in the future. Deutsche Telekom, which owns more than 60 percent of T-Mobile, wants to avoid giving up too much to Dish and creating a large competitor.

T-Mobile and Sprint have said they will sell off other assets like Sprint Prepaid and Virgin Mobile brands. Dish would get to use T-Mobile’s service for about seven years, until it has built its own infrastructure. There would also be an agreement that T-Mobile would give Dish operational support while customers switched over to Dish.

Sprint is controlled by SoftBank Group. Both companies said they would pause the deal until the case by the state attorneys general is completed. There is a July 29 deadline, although it will likely be extended. Federal Communications Commission Chairman Ajit Pai has signed off on the deal, and a formal order of his decision is expected to appear in the next few weeks.

Earlier this month, it was reported that the DOJ was close to approving the merger if the conditions to Dish were met.

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