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Conflicting Signals On Sprint, T-Mobile Merger: FCC Up, But DOJ Reportedly Still Down On Deal

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Conflicting Signals On Sprint, T-Mobile Merger: FCC Up, But DOJ Reportedly Still Down On Deal

Investors were left holding the line Monday, getting conflicting signals on the proposed merger between mobile phone giants Sprint Corp. (NYSE: S) and T-Mobile Us Inc (NASDAQ: TMUS).

What Happened

The chairman of the Federal Communications Commission said he would recommend approval of the merger, but a report emerged later in the day said the Justice Department could still scuttle the deal.

Sprint shares soared by more than 25 percent and T-Mobile shares also rose after FCC Chairman Ajit Pai said he supported the merger. Later Monday, Bloomberg reported the DOJ was “leaning against” approving T-Mobile’s proposed takeover of its rival, citing sources that said proposed remedies to antitrust concerns don’t yet go far enough.

Why It's Important

The changes the two companies announced to their planned $26 billion deal did satisfy Pai, who said in a statement that they would help advance U.S. leadership in the move to 5G, and help bridge the “digital divide” between those with and those without advanced internet access.

Pai also noted the companies said the joined company would divest from Boost Mobile, easing concerns about anti-competitiveness in the prepaid wireless segment.

“I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in his statement. “This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

Price Action

Shares of Sprint were up 17 percent at $7.26 Monday afternoon. Shares of T-Mobile were trading up 3 percent to $77.63.

Related Links:

Sprint, T-Mobile Spike Higher On Updated Merger Conditions; FCC's Pai Will Recommend Approval

Report: Sprint, T-Mobile May Consider Concessions To Gain Merger Approval

Photo credit: Mike Mozart, Flickr

Posted-In: Ajit Pai Department of Justice FCCM&A News Top Stories Media Best of Benzinga

 

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