There’s been a lot of talk recently about a potential merger between Sprint Corp. (NYSE:S), (which is currently the number 3 wireless carrier in the country) and T-Mobile US Inc. (NYSE:TMUS). The proposed merger would be a game-changer for the telecom industry, where rivals Comcast Corporation (NASDAQ:CMCSA) and AT&T Inc. (NYSE:T) reign largely unchecked, though whether the merger would provide a stimulus for sustainable competition or hinder it is hard to say. One thing’s for sure — regulators aren’t optimistic, Reuters reports.
Federal Communications Commission Chair Tom Wheeler says he’s skeptical about the idea, however. Wheeler met with Sprint’s Chair Masayoshi Son and Sprint’s chief executive Dan Hesse on Monday. Son is also the chief executive of SoftBank Corp., the company which acquired Sprint last year.
Wheeler apparently echoed the thoughts of antitrust chief William Baer at the U.S. Department of Justice, who met with the duo last week and said he thought a merger between any two of the top four wireless phone companies had “long odds” of regulatory approval. Sprint will need the go-ahead from both the FCC and the Justice Department to make the merger between the two companies possible.
Both U.S. regulators have made it clear that they intend to keep four major players in the wireless phone industry; this isn’t the first time companies have moved to change that, either. In 2011, the Department of Justice blocked an AT&T merger with T-Mobile, which AT&T planned to buy in a $39 billion acquisition.
Sprint argues that regulators shouldn’t dismiss the idea of a merger without first giving it fair consideration. The company says it believes the top two competitors, Verizon Wireless and AT&T, have formed a “duopoly,” as T-Mobile’s John Legere put it, within the current market that doesn’t serve U.S. consumers as well as it could. There’s no room for healthy competition given Verizon and AT&T’s dominance, Sprint protests.
“I am not unduly surprised by the FCC Chair’s skepticism. I feel it’s a rather typical reaction,” a source close to SoftBank who spoke with Reuters said of the situation. SoftBank’s shares have bounced back after dropping as much as 5.8 percent on Tuesday in Tokyo, the company’s lowest level in more than four months, according to a Reuters report.