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Justice Department Against the T-Mobile and Sprint Multi-Billion Dollar Merger
June 13, 2019
5G satellites in space

This week a group of state attorneys general filed a federal lawsuit against the merger of the two telecommunication companies. German T-Mobile and Japanese Sprint, both operating in the U.S., decided to join forces and respond to President Donald Trump’s competition to win a global 5G race.

The two companies agreed to join forces under one name — T-Mobile. The executives of the companies appealed to Trump’s idea to implement a more powerful Internet across the country. The 5G is a new technical standard for networks which are faster, with less lag and which promote smart cities. The new system will also require a chipset in the telephone and an antenna, which renders phones being used right now useless.

Despite the two companies’ promise to make the new customer experience centers available to 99% of citizens around the country in six years, lawmakers consider the prospect as a threat to American economy and its workers.

One of the prosecutors on the case, Attorney General Letitia James, expressed the concern that the merger would drive up the prices of telecommunication services by eliminating Sprint as an affordable provider. The leading statement of lawmakers at the hearing was that the T-Mobile, as well as Sprint, had a great number of low-income customers.

Also, after the merger states that the prices for cell phone service could go up, the competition will be eliminated. President of a labor union, Communication Workers of America, claimed at the hearing that the merger would leave many Americans jobless.

CEO of T-Mobile, John Legere, said that the merger itself would provide 5,600 new jobs within the next two years. He also added that the new company would cater for 127 million customers around the country.

To further convince the federal court, Legere added a timeframe within which the merged companies would build 5G and invest in rural parts of the U.S. He further added that, should they fail, the companies would sell Sprints brand, prepaid Boost Mobile.

The Federal Communication Commission (FCC) Chairman, Ajit Pai, and two other Republican commissioners supported the merger. The FCC added at the discussion that by the end of 2016 more than 20 million Americans lacked access to the high-speed Internet.

The public-interest advocates in the discussion explained that the statement of the T-Mobile CEO did not address the arising issues of higher prices and less competition. The U.S. Justice Department is still against the proposition. As they claim, they use more firm criteria than the FCC. DOJ also added that the existing companies like Verizon and AT&T already had 5G.

In case of a merger between the two companies, German T-Mobile parent, Deutsche Telekom, would have 42% of the company, while Japan’s SoftBank, the owner of Sprint, would own 27% of the new company. The Justice Department is still evaluating the case, and the final decision rests upon Makan Delrahim, the top antitrust official.

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