| WASHINGTON, June 5
WASHINGTON, June 5 Sprint Corp and
T-Mobile might have some fresh arguments to allay
regulator skepticism about a merger, but the government may
still be reluctant to approve shrinking the U.S. wireless market
from four main players to three.
Analysts said a decline in shares of both companies on
Thursday reflected those high regulatory hurdles. T-Mobile
closed 2.3 percent lower and Sprint 4 percent lower.
Sprint, purchased by Japan's Softbank Corp in 2013,
has agreed to pay about $40 per share, or over $32 billion, for
T-Mobile US, a person familiar with the matter said on
Wednesday, bringing to a head a long-discussed and controversial
deal to reshape the U.S. cellphone market.
But top U.S. antitrust and communications enforcers have
already warned that the wireless market is too concentrated. In
2011 the Justice Department stopped a bid by AT&T Inc, No.
2 in the market, to buy struggling T-Mobile.
Top dog Verizon Communications Inc and AT&T each have
roughly twice as many subscribers as either Sprint or T-Mobile,
in the third and fourth spots by numbers of subscribers.
Bill Baer, the assistant attorney general for antitrust,
said in January that it would difficult for his agency to
approve a big wireless mergers.
"It's going to be hard for someone to make a persuasive case
that reducing four firms to three is actually going to improve
competition for the benefit of American consumers," Baer told
the New York Times.
Masayoshi Son, CEO of Softbank, trekked to Washington in
February to seek the counsel of Tom Wheeler, chairman of the
Federal Communications Commission, but got a cool response to a
potential merger. Wheeler has not hinted at any softening of
Antitrust experts called the unusually public cautions from
Wheeler and Baer a warning.
"This is going to be a tough road for them. Tough," said one
expert, who spoke anonymously to protect business relationships.
"In the wake of AT&T/T-Mobile, this deal faces long odds."
The Justice Department noted T-Mobile's role as a maverick
and price-cutter as a reason to stop the earlier deal. That
dynamic has not changed, said David Balto, a veteran of the
Federal Trade Commission now in private practice.
"There's a segment of the market which needs to have
competition protected, which is the value (discount) segment,"
Balto said. "This is where these guys go head to head."
A third antitrust expert said the companies might have cards
yet to play to win approval: "There may be good arguments (for
the deal) that we just haven't seen yet. But ... the odds are
heavily against the deal."
SoftBank is likely to argue that the huge pending mergers of
Comcast Corp with Time Warner Cable Inc and
AT&T with DirecTV reinforce the danger of creating a
handful of media and telecom giants.
That threat was underlined when the FCC in May voted to
restrict AT&T and Verizon in the 2015 auction of highly valued
But others say approval this year of a merger between US
Airways and American Airlines was a sign regulators could be
convinced of the merits of a deal that reduces the number of
competitors but creates a stronger number three.
"They need a game-changing idea," said Robert McDowell, a
former Republican FCC commissioner.
"There has to be a new proposal in order to shake up the
mindset of the Obama administration which has a 'religious'
conviction against going from four to three national wireless
carriers. I don't see that proposal yet, but perhaps they're
working on it."
(Reporting by Diane Bartz, Alina Selyukh and Marina Lopes,
Editing by Ros Krasny and Lisa Shumaker)