Things are already looking dicey for the proposed merger between T-Mobile US and Sprint, and then New York’s Attorney General wades into the saga with scathing opinions.
“This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent,” said Attorney General Letitia James.
Support for the merger is pretty rare nowadays, though James and California Attorney General Xavier Becerra have filed a multi-State lawsuit to add more fuel to the flames. In total, ten States have been included in the lawsuit, compounding the headaches induced by an already prolonged approval process.
The omens are not looking particularly positive for T-Mobile US and Sprint.
“When it comes to corporate power, bigger isn’t always better,” said James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country.
“That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
T-Mobile US and Sprint are promising a cheaper and faster service, as well as a challenge to the dominance of AT&T and Verizon, but this isn’t enough to convince the legal heavyweights. It’s the same argument which is evident throughout the world of mergers and acquisitions; four to three does not encourage optimism.
Perhaps the most damning argument against the merger is market trends over the last decade. According to the US Labor Department, the average cost of mobile service has fallen by roughly 28% over the last decade, while mobile data consumption has grown rapidly. T-Mobile US and Sprint might argue a merger is better in the long-run for competition, but there is an old saying; if it isn’t broken, don’t fix it.
With four telcos competing for valuable post-paid subscriptions, the consumer does appear to be winning. Tariffs are expensive in the US, though they are becoming cheaper. Another interesting aspect to the lawsuit points to some skulduggery from the duo.
The Attorneys General’s investigation into the merger found that many of the claimed benefits were unverifiable and could only be delivered years into the future, if ever. Specifically, the AG’s are referring to the lightening speeds promised and the ease at which the duo believes a 5G network can be rolled out nationwide. This isn’t necessarily stating it is not possible, just that the claim is not supported by evidence.
For a decision which is likely going to be based on evidence provided, this is a very simple, but powerful argument for blocking the merger.