Wednesday, 21 Aug 2019

Sprint-T-Mobile Merger Faces New Hurdle With Lawsuit by States

A group of attorneys general from 10 states filed a federal lawsuit on Tuesday in a bid to block a proposed merger between the wireless carriers T-Mobile and Sprint, a $26 billion deal that has yet to receive the Justice Department’s approval.

The lawsuit, led by Letitia James of New York and Xavier Becerra of California, contends that competition will suffer and consumer prices will rise if the companies combine. Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin joined the complaint, which was filed in Federal District Court in Manhattan.

“The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country,” Ms. James said in a statement.

She called the deal “exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

The merger could cost Sprint and T-Mobile subscribers at least $4.5 billion annually, according to the complaint.

Ajit Pai, the chairman of the Federal Communications Commission, said last month that he favored the deal, which is expected to reshape the wireless industry in the United States.

The companies expressed “significant commitments” to expand broadband service in poor, rural areas and establish an extensive network using the next-generation 5G wireless technology, Mr. Pai said.

T-Mobile and Sprint, the third- and fourth-largest wireless providers in the country, did not immediately respond to requests for comment. The proposed merger would better position the companies to compete against rivals AT&T and Verizon.

In recent months, Democratic lawmakers in Washington have been critical of the proposed deal and of the two companies’ lobbying blitz. John Legere, T-Mobile’s chief executive, has paid many visits to the F.C.C. as part of a charm offensive, and Sprint’s executive chairman, Marcelo Claure, hosted a fund-raiser for a Tennessee lawmaker who has supported issues favored by the telecommunications industry.

Democrats have also noted that company executives have stayed at Trump hotels repeatedly since the proposed merger was announced last year. In January, for instance, Mr. Legere stayed at the Trump International Hotel in Washington for two nights, at $2,246 apiece.

During the Obama administration, regulators were adamant that the presence of four big nationwide wireless carriers helped keep prices low for consumers and spurred innovation. Their successors in the Trump administration have not taken a similar stance.

President Trump has made the advancement of so-called 5G wireless technology to be used by the next generation of mobile broadband networks a national priority. He has argued that China’s lead in this area poses a threat to national security, because the technology will be a key component in the development of robotics, driverless vehicles and other emerging industries.

Mr. Trump’s rhetoric on the issue is helpful to T-Mobile and Sprint, who have portrayed the merger as a way of bringing 5G technology to rural areas that cable services have neglected. The companies have argued that by joining forces they will also be able to bring 5G to market more quickly than they would otherwise.

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