T-Mobile US Inc girds for decisive battle with states over Sprint Corp

  • Technology
  • Monday, 09 Dec 2019

Washington: The future of the US wireless industry hinges on a court battle kicking off today in federal court in Manhattan, a case that could end with T-Mobile US Inc buying Sprint Corp, and Dish Network Corp getting the go-ahead to enter the market.

US judge Victor Marrero will weigh arguments from a group of states that say he should block the US$26.5bil Sprint deal because it will raise prices on consumers by eliminating competition between the two carriers.

T-Mobile says the opposite: that by combining with Sprint, it can reduce costs and lower prices.

T-Mobile told Marrero late Friday that the planned two-week trial isn’t long enough for the companies to explain why the deal won’t volatile antitrust law, as a group of states claims.

“Cramming it into a two-week period would do a disservice to the court,” T-Mobile lawyer George Cary said at the final pre-trial hearing in Manhattan on Friday.

A win for the companies would create a new wireless giant that would overtake AT&T Inc to become the No. 2 carrier in terms of monthly regular subscribers behind Verizon Communications Inc.

A loss would leave Sprint a distant No. 4 in the market, weighed down by a debt load that threatens to cripple the company.

The states, led by New York Attorney General Letitia James and California’s Xavier Becerra, have the edge going into the trial, said Blair Levin, an analyst at New Street Research. He said they have the better argument: that the tie-up violates antitrust laws and that the proposed settlement -- setting up Dish to become a new wireless carrier –doesn’t resolve the anti-competitive problems.

That makes Dish chairman Charlie Ergen the most important witness of the trial, Levin said. He’ll have to convince the judge that Dish can quickly become a robust competitor in the market even though the company has no experience in selling wireless-phone service.

“If they fail on that, the fix fails,” Levin said.

That’s the view of the states. They argue there is no chance Dish can really replace Sprint as a competitor in the applicable timeframe of two to three years.

Dish has agreed to buy Sprint’s Boost prepaid business, plus a number of cell towers and airwaves, to get a start on building a new so-called facilities-based US wireless carrier. The agreement includes a commitment to build an advanced 5G network that covers two-thirds of Americans within four years.

“The prospect that Dish may someday, many years in the future, establish itself as a fourth competitor that is vaguely comparable to the fourth competitor that already exists today is a wholly insufficient defence for an otherwise anticompetitive merger,” the states said in court papers.

Among the states’ witnesses at the trial will be Deutsche Telekom chairman and chief executive officer Tim Hoettges. — Bloomberg
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