Sprint, DoJ meeting casts doubt on T-Mobile acquisition
A meeting between U.S. Justice Department officials and Sprint board members has done little to ease the passage of a potential acquisition of T-Mobile by the rival carrier.
According to Wall Street Journal sources, board members Masayoshi Son and Dan Hesse met with DoJ officials to discuss the interest in a potential buyout of T-Mobile by Sprint, which would leave U.S. consumers with a choice of three major carriers.
Masayoshi Son, CEO of SoftBank, purchased a majority stake in Sprint last year. Deutsche Telekom owns a majority stake in T-Mobile, and according to rumors, the firms have been in talks over a potential merger.
Sprint, the third-largest U.S. carrier by subscriber numbers, is interested in acquiring T-Mobile, the fourth largest which has recently boosted customer numbers through aggressive price plans and low handset costs. In Q3 2013 alone, the firm managed to bring an additional 650,000 subscribers to the fold.
According to people with knowledge of the meeting, U.S. antitrust regulators are concerned that consolidation of the companies could result in a less competitive market, and therefore potential acquisitions "could face regulatory difficulties."
"In April, the Justice Department wrote in a comment letter to the FCC that the four wireless carriers competed in ways that are important to consumers. The FCC has sent similar signals." the journal says.
William J. Baer, assistant attorney general for the antitrust division of the Justice Department, recently said that consumers enjoy more "favorable competitive conditions" since a merger between T-Mobile and Sprint was blocked three years ago. Since this moment, T-Mobile has touted itself as the "uncarrier," creating attractive price plans and 'contracts' for consumers -- which has forced its rivals to follow suit, giving consumers more choice and extended options.
In order for acquisitions to go ahead, the U.S. Justice Department must give companies permission, but as the market is currently competitive, it will only do so if the deal is believed to benefit U.S. consumers.