Thursday, October 12, 2017

Report: DOJ Staffers to Advise Blocking Sprint T-Mobile Merger -

Long-time staffers at the Department of Justice are likely to advise their higher ups that they should block Sprint's latest attempt to acquire T-Mobile, Reuters reports. We've already noted how history doesn't look kindly on telecom M&As, which usually result in dramatic job losses as position redundancies are eliminated, and notably higher prices for consumers courtesy of less incentive to actually compete. And despite T-Mobile's recent successes in the field, reducing the number of wireless competitors from four to three is likely to have the same impact.

Still, Sprint has been buttering up the Trump administration for much of the year, going so far as to let him claim credit for jobs that the President had absolutely nothing to do with.

Many expect the Trump administration to approve the deal, but the report indicates staffers believe that would be a terrible idea.

"The Justice Department's main concern is how the deal would affect competition in the US mobile sector," the report notes. "Antitrust staff will want to let T-Mobile continue as it has done, aggressively wooing customers away from market leaders Verizon Communications Inc and AT&T, the people said."

Of course what longtime DOJ experts want may not mean much. Current FCC boss Ajit Pai has been little more than a rubber stamp for the sector, and while Trump made a lot of noise on the campaign trail about being tough on antitrust (he promised to break up Comcast/NBC and block AT&T Time Warner, neither of which will be happening), his top DOJ antitrust chief Makan Delrahim has been rather mindlessly bullish on M&As.

"Losing that head-to-head competition could drive up prices for those on a more limited income," said Gene Kimmelman, president of Public Knowledge. That in turn could reverse some of the positive progress made in the sector in recent years, advocates warn, including the return of simpler unlimited data plans.

As the industry begins using its hired academics, economists, lobbyists and consultants to sell the deal over the next few weeks, most of them will likely try to argue that Sprint would have died off anyway. But that ignores Sprint's slowly-improving balance sheet and networks, and the fact that there's any number of deals Sprint and Softbank could consider (Comcast, Altice, Charter) that don't involve the elimination of a direct competitor.

Reports indicate that Sprint and T-Mobile are preparing to formally announce their latest merger attempt sometime in the next few weeks.

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