Mississippi will back Sprint, T-Mobile merger and drop court challenge

FILE PHOTO: A T-Mobile store is pictured in the Manhattan borough of New York, New York, U.S., May 20, 2019. REUTERS/Carlo Allegri

WASHINGTON (Reuters) - One of 17 U.S. states that sued to block a proposed $26.5 billion tie-up of Sprint Corp S.N and T-Mobile US Inc TMUS.O agreed to drop the challenge after reaching a deal with the companies.

Mississippi Attorney General Jim Hood said in a statement he will withdraw from the legal challenge over the planned merger of the third- and fourth-largest U.S. wireless carriers. He said the combined company has agreed within three years to deploy a 5G network in Mississippi with at least 62 percent of the state’s general and rural populations having access to high-speed service.

Hood said the prior merger agreement did not include any specific commitments benefiting Mississippi. The company agreed that for at least five years it will offer an unlimited talk, text and 2GB data plan for $15 per month and a $25 per month plan for 5GB of data.

“The world around us is almost fully digital, but Mississippi is lagging behind with internet deserts across the state,” Hood said. “My agreement with T-Mobile will help fill this gap.”

T-Mobile Chief Executive John Legere said on Twitter the company was “thrilled” Hood “withdrew from the states’ lawsuit after learning more about ALL the amazing benefits the New T-Mobile will deliver to US consumers!”

T-Mobile has also promised to roll out a broadband service that will be available to hundreds of thousands of Mississippians, Hood said.

Last week, a majority of the five-member U.S. Federal Communications Commission voted to approve the deal, but the order has not yet been made public. The U.S. Justice Department approved the deal in July.

The lawsuit led by New York against the firms and their parent companies Softbank Group Corp 9984.T and Deutsche Telekom AG DTEGn.DE, argues the deal will hike consumer prices. A trial date has been set for Dec. 9, and several states have joined in recent months.

Earlier this week, LightShed analysts Walter Piecyk and Joe Galone suggested that T-Mobile should renegotiate the deal with Sprint to get better terms. The company’s merger agreement will expire on Nov. 1 unless they agree to extend the date.

Reporting by David Shepardson; Editing by Bill Berkrot