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The $26 billion T-Mobile and Sprint merger was approved by the judge. After this decision was announced the Sprint (S) stock price has increased by more than 70%.
A United States judge approved Sprint’s proposed $26 billion merger with T-Mobile on Tuesday. Judge Victor Marrero of the U.S. District Court for Southern New York gave the green light to the deal between the two telecommunications companies. That happened after 13 attorneys general from states including New York and California filed a lawsuit asking for merger-block worrying about the competition.
The deal, previously reached in 2018 and earlier got the green light from the U.S. Department of Justice and the Federal Communications Commission (FCC), still needs to get a ‘yes’ by the California Public Utilities Commission before the transaction is finished.
Sprint Needs This Merger with T-Mobile
This merger will build three similarly big competitors in the wireless business: the “new” T-Mobile, Verizon and AT&T.
Satellite company Dish Network intends to use this deal as a incentive to become a new wireless services provider.
The judge explained his resolution by saying that Sprint probably wouldn’t manage to succeed by working solely. Even though the company is currently in fourth place, it has been losing customers for quite some time. Also it wasn’t sure that it’ll manage to deploy nationwide 5G network alone.
Even though States’ attorneys general said that approving this merger will make wireless service and prices more expensive, Marrero dismissed those accusations.
“How the future manifests itself and brings to pass what it holds is a multifaceted phenomenon that is not necessarily guided by theoretical forces or mathematical models.”
T-Mobile CEO John Legere called this ruling a “huge victory” and stated that the new company, which will keep the T-Mobile name, is “great for consumers and great for competition.”
Both the FCC and the DOJ welcomed the judge’s decision. Justice Department antitrust chief Makan Delrahim said he was happy the judge reacted positively with the DOJ’s decision to bolster Dish Network as a fourth wireless competitor.
FCC chairman Ajit Pai also said he was “pleased” with the decision and reiterated companies’ promise to expand 5G.
Some Attorneys Were Against Decision
However, New York Attorney General Letitia James announced that she will probably appeal the decision of the United States District Court for Southern New York to approve a $26 billion merger between telecommunications giants T-Mobile and Sprint.
“From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets. Reducing the mobile market from four to three [in the US] will be bad for consumers.”
Together with California Attorney General Xavier Becerra, James led the team of 13 state attorneys who opposed the possible approval of the T-Mobile-Sprint merger deal.
Be it as it may, it cannot be said that this kind of happenings wasn’t expected. Last month Sprint Corp. announced its net operating revenue in the third quarter of fiscal 2019 were $8.08 billion, 6% lower compared to the prior year. Net operating income was down 86% year-over-year to stand at $66 million. Net loss was $120 million, down 15% from last year’s figure of $141 million. Per share, the loss was $0.03, unchanged from Q3 in 2018.
Sprint stock was up by 0.35% to $8.55 in premarket trading at 6:10 am ET while the T-Mobile was down by 0.20% to $94.30 at the same time. Also, a huge bet on Sprint is finally paying off for Masayoshi Son as well. Shares in his company SoftBank rallied on Wednesday, after a U.S. court approved the between T-Mobile and Sprint, the carrier SoftBank acquired nearly a decade ago. At the time of writing the stocks were up by 11.89% to $52.5 at 6:15 am ET.