Judge approves merger between T-Mobile, Sprint

A district judge on Tuesday approved the $26.5 billion merger between T-Mobile and Sprint, clearing the final hurdle for two of the largest telecom companies in the U.S. to combine despite a challenge from a group of state attorneys general.

The lawsuit from the coalition of 15 attorneys general was the last obstacle standing in the way of the lucrative deal, which has already received the green light from federal regulators.

Judge Victor Marrero of the U.S. District Court in Manhattan, a Clinton appointee, wrote that the proposed merger between two of the four major telecom companies in the U.S. is not “reasonably likely to substantially lessen competition,” striking down the states’ central argument.

The states had argued that the merger could harm competition in the telecom marketplace, while raising concerns it could potentially raise prices for the new company’s hundreds of millions of subscribers.

Marrero said he didn’t see evidence leading him to block the merger in “this particularly dynamic and changing industry.”

The states, which were led by California Attorney General Xavier Becerra and New York Attorney General Letitia James, stood by their case on Tuesday.

“Our fight to oppose this merger sends a strong message: even in the face of powerful opposition, we won’t hesitate to stand up for consumers who deserve choice and fair prices,” Becerra said in a statement. “We’ll stand on the side of competition over megamergers, every time.”

Becerra signaled further action, adding, “Our coalition is prepared to fight as long as necessary to protect innovation and competitive costs.”

The combined company will boast a regular monthly subscriber base of about 80 million, putting it in direct competition with its longtime competitors.

“Today was a huge victory for this merger … and now we are FINALLY able to focus on the last steps to get this merger done!” said T-Mobile CEO John Legere in a statement. “We want to thank the Court for its thorough review of the facts we presented in our case. We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition.” 

The decision comes about two years after the deal was first announced by T-Mobile’s owner Deutsche Telekom and Sprint’s parent company SoftBank Group. 

One judge and a California panel still need to sign off on the merger, though it’s unlikely either of those will kill the deal.

The country’s top antitrust enforcers submitted a brief arguing in favor of the deal earlier this year. The Federal Communications Commission (FCC) and Department of Justice (DOJ) contended that the states attempting to block the enormous telecom deal could wind up harming customers across the country. 

The FCC and DOJ separately approved the T-Mobile-Sprint merger last year, after requesting a few concessions from the companies.

Under the deal with DOJ, T-Mobile and Sprint are required to divest some of their resources to Dish, a satellite television company that has been tapped to create a mobile network to compete with the merged company. Critics have raised serious concerns around whether Dish can serve as a serious competitor to the new T-Mobile, Verizon and AT&T.

The case in New York centered largely on Dish, a smaller company with little background in building a wireless network. 

“While the evidence at trial showed that the Justice Department’s scheme to prop up Dish Network would not result in a fourth competitor that would be ‘timely, likely and sufficient,’ Dish should be given every opportunity to succeed,” said Gigi Sohn, a former adviser at the FCC under the Obama administration and an outspoken critic of the deal.

Democratic lawmakers have railed against the T-Mobile-Sprint deal for the past year, urging regulators to block it due to the potential for heightened prices for consumers. But ultimately, the judge found that the merger should not be blocked under existing antitrust laws.

 Updated 9:39 a.m.