Justice Cool on Sprint/T-Mobile Merger

Posted by Sam Churchill on

Justice Dept Officials have met with Sprint Directors Son and Hesse, but signaled a dim view toward a merger between Sprint and T-Mobile, reports the Wall St Journal. U.S. antitrust authorities regard the current lineup of four national mobile-phone carriers as important to maintaining a competitive market.

The FCC also reviews telecom transactions to determine if they are in the public interest and has also sent signals that it prefers 4 national carriers over 3.

It doesn’t appear the meeting has deterred Mr. Son, who has been the driving force behind the effort to merge Sprint, the third-largest U.S. carrier by subscribers, with No. 4 T-Mobile, according to the WSJ.

The main argument is that Verizon Wireless and AT&T account for more than two-thirds of the U.S. industry’s subscribers and nearly all its profits. Absent a merger, they won’t face any significant competition.

Three years ago the Justice Department shot down a $39 billion deal for AT&T to buy T-Mobile, lauding the smaller company’s role as a price-cutting maverick. T-Mobile has stepped up its aggressive tactics in the past year, getting rid of industry standbys like service contracts and international data roaming fees,and has started reversing a long slide in its customer base.

T-Mobile’s resurgence might leave regulators less inclined to approve a deal. Justice Department officials regard T-Mobile’s strides since the demise of the AT&T deal as good for consumers and competition, said people familiar with the matter.

Meanwhile, AT&T reported weaker wireless subscriber growth for the fourth quarter, but stronger data revenues.

Verizon’s 4Q financials revealed an 8.0 percent year-over-year increase in service revenues in 4Q 2013; 7.5 percent year-over-year increase in retail service revenues; 29.5 percent operating income margin and 47.0 percent segment EBITDA margin on service revenues (non-GAAP).

Posted by Sam Churchill on Wednesday, January 29th, 2014 at 9:50 am .

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