T-Mobile-Sprint merger likely to be blocked by judge, say analysts at Cowen


As we wait for the final arguments in the T-Mobile-Sprint merger trial, there’s a lot of speculation about how each side did with their arguments and who Judge Victor Marrero might rule in favor of. A new analyst report came out today that says that the states might come out on top.

Cowen analysts believe that Judge Marrero will rule in favor of the state attorneys general and block the merger. “After watching the witnesses, evidence, and Judge Marrero’s questions, we continue to believe the state AGs are likely to prevail. We assign a 60% chance of this happening,” the analysts said, according to Light Reading. They added that they don’t expect T-Mo and Sprint to settle with the state AGs.

The analysts said that the state AGs “very likely” showed that T-Mobile and Sprint’s merger is anticompetitive by arguing that the U.S. wireless market is highly concentrated by marketshare and that the merger would make it even more concentrated. They also said that the questions the judge asked suggested that he didn’t believe T-Mobile’s argument that MVNOs can be considered competitors in the market.

It’s also argued that Judge Marrero wasn’t convinced that Dish can replace Sprint as a viable fourth U.S. carrier. The analysts believe it will take Dish four years to cover 70% of the U.S. population and that it will remain smaller than Sprint for the foreseeable future.

Finally, the Cowen analysts say that Judge Marrero is likely to rule in the states’ favor because he’s a Democrat and the lawsuit is “highly partisan” because it was brought by Democratic Attorneys General and is supported by FCC Democrats.

The T-Mobile-Sprint merger trial began on December 9th and testimonies wrapped up on December 20th. Some interesting tidbits about T-Mobile, Sprint, and Dish came out during that time, like John Legere confirming that T-Mo and Dish nearly merged in 2015 and Dish teasing that it’s held talks with “very exciting potential strategic partners” that it could work with to develop a more competitive product.

The FCC and DOJ reiterated their support for the merger last month, too. They argued that blocking the deal would undo the benefits gained by the government during its review of the T-Mobile-Sprint merger, such as improved rural coverage in parts of the country.

Final arguments in the merger trial are scheduled for January 15th. It’s believed that Judge Marrero could issue a ruling in February.

Source: Light Reading

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