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What The T-Mobile Takeover Of Sprint Really Means For Markets

T-Mobile Sprint

Despite fears of higher prices and job cuts, a judge has approved T-Mobile’s takeover of Sprint, saying it isn't likely to substantially lessen competition. Thus ends a years-long attempt to combine America’s third- and fourth-largest wireless carriers. The new company will be the third biggest in this space, after AT&T and Verizon,

 with a combined value of around $146 billion, including debt. 

U.S. District Court Judge Victor Marrero concluded that the proposed merger "is not reasonably likely to substantially lessen competition" in the wireless market, disagreeing with a coalition of 16 state attorneys general that sued to block the deal.

However, Nevada and Texas later settled with the two companies and left only Democratic attorneys general fighting the merger.

In his ruling, Judge Marrero said he was persuaded not to presume anticompetitive effects, as T-Mobile "has redefined itself over the past decade as a maverick that has spurred the two largest players in its industry to make numerous pro-consumer changes."

Meanwhile, the judge said that Sprint "is falling farther and farther short of the targets it must hit to remain relevant," and that he was not convinced that Sprint could survive as a major competitor.

In other words, the judge’s ruling was a lifeline to the only companies that could rival AT&T and Verizon--together.  

T-Mobile Chief Executive Officer John Legere said in a statement that the ruling was a huge victory for this merger. “We are finally able to focus on the last steps to get this merger done!” 

The two companies said they expect to close as soon as early April. 

The states’ lawsuit was the last major hurdle to the deal after it was approved by regulators at the Federal Communications Commission (FCC) and the Justice Department’s antitrust division. DoJ approved the merger in July while in November, in a completely partisan 3-2 vote, the Federal Communications Commission (FCC) has formally approved it.

FCC Commissioner Jessica Rosenworcel, who voted against the approval, warned at that time that mindless consolidation has a proven track record of making things worse for US consumers, not better.  

Related: Trader Compares Current Market Environment To 2007

“Instead of promoting vigorous competition among providers, today’s order justifies increased concentration by jerry-rigging a new provider dependent on the government dictating who sells what to whom and when,” Rosenworcel said in a statement.

For their part, two companies pledged not to raise prices for three years and to expand rural coverage that will cover 97% of the US population within three.

However, opponents seeking to stop the merger claimed that it would lower competition and slap an extra $4.5-billion annual tab on customers.

In 2018, a similar concern was raised during the $85 billion merger between AT&T and Time Warner. At that time, the two companies pledged that the merger would allow lower TV prices. 

The US Department of Justice tried to stop the merger, arguing that it would raise prices for consumers. They have argued that consumer bills could rise by $400 million annually or 45 cents per month per consumer. However, a federal judge sided with AT&T and the merger was completed.

However, since the finalization of the merger, AT&T has informed its customers three times that prices would go up. The first increase happened just two weeks after the merger and since then subscribers’ prices went up by nearly 60%. So much for that. 

Over the last year, AT&T has lost over 2.3 million TV subscribers.

By Michael Kern for Safehaven.com 

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