T-Mobile and Sprint on Sunday announced a plan to merge in a deal that would combine the third- and fourth-largest telecommunications companies in the U.S.
The two companies have attempted to merge in the past, only to abandon plans after scrutiny from regulators or failed negotiations.
Under the new proposal, the two companies would combine under T-Mobile’s name. John Legere, T-Mobile’s current CEO, would lead the new company.
Sprint and T-Mobile say a merger is the only way for them to remain competitive with Verizon and AT&T in the wireless market and in the race to develop 5G networks.
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“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience – and do it all so much faster than either company could on its own,” Legere said in a statement.
“As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf,” he added.
The plan is likely to invite scrutiny from regulators, but the question now is whether they will intervene to stop it. The deal will have to be cleared by the Department of Justice and the Federal Communications Commission (FCC). It’s already prompted opposition from some Democrats and consumer advocates who say that shrinking the wireless market even further will hurt competition.
Gigi Sohn, an adviser to former Democratic FCC Chairman Tom Wheeler, said in a statement that the deal would hurt consumers who have benefited from Sprint and T-Mobile’s efforts to provide cheaper alternatives to the other half of the market.
“Both companies have been feisty competitors to the two biggest national mobile wireless carriers, Verizon and AT&T, introducing consumer friendly pricing and data plans that have pushed the big two to lower their prices and expand their data offerings,” Sohn said. “This combination will not only result in less choice for consumers, it will provide greater incentive for the three remaining companies to act in concert.”
The New York Times reported last week that the Justice Department had opened an antitrust investigation into whether AT&T and Verizon were colluding to make it harder for consumers to switch phone service providers.
Prosecutors have also sued to stop AT&T’s vertical merger with Time Warner.
But it’s unclear how regulators will respond to the latest deal. The Republican-led FCC has viewed consolidation favorably in other markets, and said last year that the wireless industry is competitive, despite the lack of major players. A spokeswoman for FCC Chairman Ajit Pai declined to comment.
— This report was updated at 1:15 p.m.