The US Department of Justice has told T-Mobile US Inc and Sprint Corp that it has concerns about their proposed US$26 billion merger in its present structure, sources familiar with the matter said on Tuesday, although no final decision has been made.
Sprint shares fell about 9 percent after the bell as investors increased bets the deal would not be completed following a Wall Street Journal report that the merger is unlikely to be approved as currently structured.
Shares of T-Mobile fell 4 percent.
The deal had been criticized by consumer advocates and some lawmakers, because it would reduce the number of national wireless carriers available to consumers from four to three.
T-Mobile has defended the proposed merger, saying that the combined company would be better and faster at building 5G, the next generation of wireless, to compete with industry leaders AT&T Inc and Verizon Communications Inc.
A final decision on the deal is likely near the end of the 180-day US Federal Communications Commission (FCC) review period that expires in June.
T-Mobile US chief executive officer John Legere was in Washington on Tuesday and has meetings later this week at the FCC, two people briefed on the matter said.
Legere said on Twitter that it was “simply untrue,” that Department of Justice staff had told the companies the deal was unlikely to be approved in its present form.
The department declined to comment.
Sprint executive chairman Marcelo Claure said that the Wall Street Journal report was not accurate.
“We continue to have discussions with regulators about our proposed merger with @TMobile. That process is ongoing,” Claure wrote on Twitter.
The probe was going along as expected, a third person familiar with the investigation said, adding that there had been no serious discussion of any divestitures of spectrum or other assets and that much of the conversation with regulators had been about proposed efficiencies in the development of 5G.
The agreement to combine the carriers, struck in April last year, was approved by both companies’ shareholders in October and has received national security clearance, but still needs approval from the department and FCC.
A number of state attorneys general are also reviewing the deal.
Executives from both companies in February faced tough questions from lawmakers about how the companies’ planned merger would affect prices and jobs, especially in the rural US.
A group of eight Democratic US senators and independent Senator Bernie Sanders urged the department and FCC to reject the deal, saying monthly bills could rise as much as 10 percent.
To win support for the deal, T-Mobile had said that it would not increase prices for three years and promised to use some spectrum for wireless broadband in rural areas.
Legere has also pledged to build 5G without using networking equipment from Huawei Technologies Co Ltd (華為) or ZTE Corp (中興), two Chinese telecommunications firms distrusted by US national security experts.
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