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Justice Department may block T-Mobile/Sprint merger if settlement isn’t reached soon

Regulatory obstacles are still holding up the deal

Photo (c) sx70 - Getty Images
The Department of Justice (DOJ) has been clear that it’s skeptical of the proposed merger of T-Mobile and Sprint. Now, the DOJ is reportedly considering filing a lawsuit to block the $26.5 billion deal if the two telecom providers do not reach a settlement by next week, CNBC reports. 

Citing “people familiar with the negotiations,” CNBC says the DOJ intends to sue to block merger if T-Mobile, Sprint, Dish, and T-Mobile’s parent company Deutsche Telekom can’t reach an agreement on issues that have been holding up the deal. 

In April, the Wall Street Journal reported that the companies had been told by Justice Department officials that the merger was not likely to be approved as structured. The Department has expressed concern that the merger -- which would reduce the number of carriers to three -- could negatively affect competition in the industry and lead to higher costs for consumers. 

Dish Network’s role in question

To assuage the DOJ’s concerns, T-Mobile and Sprint recently agreed to sell the prepaid brand Boost and make Dish a fourth wireless provider to ensure competition in the industry. The DOJ said earlier this month that it was close to approving the deal if the Dish conditions were met.

However, Deutsche Telekom is reportedly concerned that if it allows Dish to use T-Mobile’s new network while Dish builds out its own infrastructure, a cable or technology company could swoop in and buy Dish and use the T-Mobile network. Deutsche Telekom wants Dish to be cut off from the T-Mobile network if it’s purchased by a cable company, but the DOJ has said it’s not willing to allow that. 

The companies had previously announced a July 29 deadline for completing their merger, but they must first gain Justice Department approval. The Federal Communications Commission has already said it supports the deal

Now, reports say that if the companies can’t reach a settlement by the end of next week, the Justice Department may sue to block the merger. The ultimatum comes a month after a group of U.S. state attorneys general sued to block the merger on the grounds that it would cost consumers more than $4.5 billion a year. 

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