Analyst company MoffettNathanson warned a potential legal challenge from state officials could reduce the likelihood of T-Mobile US and Sprint gaining federal approval for a planned merger.
Though the operators’ arguments in favour of the deal have remained the same, MoffettNathanson said the political climate has shifted. Its announcement followed a report by Bloomberg that up to 16 state attorneys general could sue in federal court to block the transaction.
In a note to investors, MoffettNathanson said such action “raises the odds” that the US Department of Jutice (DoJ) would reject the deal to avoid a potentially “embarassing reversal” later on.
The DoJ in February lost a bid to retrospectively block AT&T’s acquisition of Time Warner.
MoffettNathanson also pointed out the deal has yet to clear all state approvals, with three of 19 remaining. Though it cleared a major hurdle in earning a nod from officials in New York in February, a green light from California still outstanding: “It’s not clear how the deal could move forward if a state the size of California blocked it; separating a network (and a customer base) along state lines would be incredibly difficult.”
In addition to approvals from the DoJ and state officials, the deal must also be cleared by the Federal Communications Commission [1].
[1] https://www.mobileworldlive.com/featured-content/top-three/t-mobile-us-sprint-deal-faces-more-delays/
