T-Mobile Deal Gets Opposition From More States; Sprint Drops

(Bloomberg) -- T-Mobile US Inc.’s acquisition of Sprint Corp. drew additional opposition from states as four more attorneys general joined a lawsuit seeking to block the merger of the wireless carriers, sending Sprint shares lower.

The attorneys general of Massachusetts, Hawaii, Minnesota and Nevada are signing on to the complaint, a lawyer for New York said Friday at a court hearing. That brings the total to 13 states and the District of Columbia.

Sprint shares fell 5.4% in New York to $7 at 12:26 p.m. T-Mobile fell 2.4% to $76.09.

The states took the rare step last week of suing to block the merger before the Justice Department’s antitrust division came to a decision on the deal. The companies are trying to win the department’s approval by selling assets to Dish Network Corp. with the goal of allowing Dish to become a new wireless competitor.

“The elephant not in the room is the Justice Department,” U.S. District Judge Victor Marrero said at the hearing in Manhattan. The department’s decision “may affect what is on the table and how long it will take to address the issues,” said the judge, who ordered the trial to begin Oct. 7.

Sprint’s lawyer Steven Sunshine said the department’s decision on the tie-up is “likely to be imminent.”

Glenn Pomerantz, a lawyer for California, said he believes it’s possible -- though unlikely -- that the Justice Department could join the lawsuit if it doesn’t reach an agreement with the companies. George Cary, a lawyer for T-Mobile, told the judge he believes it’s “very unlikely” that the Justice Department would intervene in the case.

“This transaction, without regard to what happens with the Justice Department, is pro-competition,” Cary said. The deal will allow two smaller companies “to go head-to-head with the industry leaders.”

What Bloomberg Intelligence Says:

The states have a good shot at proving that the proposed T-Mobile-Sprint merger has the potential to cause harm in violation of the antitrust laws.

--Jennifer Rie, senior litigation analyst

Click here to view the piece

The state group, led by New York Attorney General Letitia James and her counterpart in California, Xavier Becerra, sued T-Mobile and Sprint in New York last week, arguing the tie-up of the No. 3 and No. 4 wireless carriers in the U.S. will harm competition and lead to higher prices.

“The proposed merger would give the new company the power to raise prices, significantly reduce competition for customers, lower quality, and cost thousands of retail workers their jobs,” Massachusetts Attorney General Maura Healey said in a statement.

The case is 19-cv-5434, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Erik Larson in New York at elarson4@bloomberg.net;David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, ;David Glovin at dglovin@bloomberg.net, Joe Schneider

©2019 Bloomberg L.P.