Telecom analyst says approval for Sprint/T-Mobile deal less likely

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WASHINGTON (Reuters) - The odds that Sprint Corp and T-Mobile will win approval for their $26 billion merger has fallen to 33 percent from 50 percent because of the U.S. states’ apparent willingness to fight the planned merger, MoffettNathanson Research said on Tuesday.

The deal, which could be challenged by the Justice Department, Federal Communications Commission, state attorneys general or utilities commissions, has been criticized because it would reduce the number of national wireless carriers available to consumers from four to three.

MoffettNathanson argued that a recent report that a group of state attorneys general were prepared to fight the deal without help from the federal government - an unusual but not unprecedented situation - actually increased the likelihood that the Justice Department or FCC would act to stop the proposed transaction.

“If the DOJ and FCC approve the transaction, the approval would almost certainly be branded as both ‘Republican’ and ‘pro-business/anti-consumer,’” the analyst note said. “The Blue State AG press release arguing ‘if they won’t protect you, we will’ almost writes itself.”

The deal to combine the No. 3 and No. 4 U.S. wireless carriers was struck in April 2018.

T-Mobile Chief Executive John Legere has defended the deal, saying the combined company would build be better and faster at building 5G, the next generation of wireless, to compete with industry leaders AT&T Inc and Verizon Communications Inc.

To win support for the deal, T-Mobile has said it would not increase prices for three years and has pledged to use some spectrum for wireless broadband in rural areas. Sprint said it hopes to complete the regulatory approval process by the end of June.

A T-Mobile representative did not immediately respond to a request for comment.

Reporting by Diane Bartz; Editing by Marguerita Choy