Department of Justice antitrust staffers have told T-Mobile US and Sprint that their planned merger is unlikely to be approved as currently structured, casting doubt on the fate of the $26 billion deal, according to the Wall Street Journal.
On Twitter, T-Mobile CEO John Legere said, “The premise of this story, as summarized in the first paragraph, is simply untrue. Out of respect for the process, we have no further comment. This continues to be our policy since we announced our merger last year.”
Sprint Executive Chairman Marcelo Claure tweeted, “We continue to have discussions with regulators about our proposed merger with @TMobile. That process is ongoing and we have no further comment.”
DOJ officials reportedly questioned claims that the merger would create “important efficiencies.”
In a heavily redacted filing to the FCC this week, Sprint said it badly needed the merger to remain competitive.
“Sprint is in a very difficult situation that is only getting worse. Sprint’s network lacks the coverage and consistency that customers demand. Sprint’s lack of low band spectrum is at the root of these network problems, and that problem cannot be fixed because there is no low band spectrum available that Sprint could buy. As a result, Sprint is losing customers—which then reduces revenues and cash flow—further limiting its ability to invest in its network and service its debt. Simply put, Sprint is not on a sustainable competitive path,” Sprint said.
Sprint noted that some of their executives have said that Sprint’s challenges were difficult and growing.
One said, “I’m not sure I can [say ‘we are really good and going to take it to great.’] I don’t agree we are really good. We are actually bad.” Others felt that some at the Company were “in denial” about some of Sprint’s challenges.
“Could we please ALL stop living in denial and pretend that Sprint does not have a $36bn dollar [debt] problem?,” said an unnamed executive in the filing.