Sprint Surges After Federal Court Approves $26 Billion T-Mobile Merger

Sprint and T-Mobile are closing in on a two year, $26 billion merger that will combine the third and fourth largest wireless carriers in the U.S.
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Sprint Corp. (S) - Get Report shares surged higher Tuesday after its long-awaited merger with T-Mobile U.S. (TMUS) - Get Report finally won approval from a federal court judge over the objections of several state attorneys general.

Multiple media reports, first published by the Wall Street Journal, had suggested Judge Victor Marrero of the U.S. District Court for Southern New York, could rule on the $26 billion tie-up as early as today, allowing the third and fourth largest U.S. wireless carriers to combine following nearly two years of disputes related to competition and pricing concerns.

"Having been tasked with predicting the future state of the national and local (retail wireless) markets both with and without the merger, and relying on both the evidence at trial and the various judicial tools available, the Court concludes that the proposed merger is not reasonably likely to substantially lessen competition," Judge Marrero wrote in his 173 page ruling on the deal. 

"The Court remain fully mindful that among its various likely prospects, one possibility a merger of this magnitude raises is that of a less competitive future in (retail wireless) markets," Judge Marrero added. "However remote, that concern must be taken seriously. The Court, however, does not believe such a possibility is reasonably likely."

Sprint shares were marked 73% higher in early Tuesday trading to change hands at $8.32 each, while T-Mobile shares rose 10.8% to $93.67 each.

The merger plans have divided lawmakers and attorneys since it was first announced in April 2018 -- despite the two companies' plans to increase 5G spending and investments in rural telecoms infrastructure -- given the fact it would reduce the number of national wireless carriers from four to three, potentially leading to broader consumer price increases. 

Last year, Federal Communications Commission Chairman Ajit Pai  approved the merger, and recommended it to his colleagues, following pledges from both companies to build 5G networks around the country, while ensuring "robust" infrastructure in rural areas, and to also enhance in-home broadband offerings to its customer base.

However, a group of U.S. Senators led by Presidential candidate Elizabeth Warren asked the Department of Justice to disclose whether President Donald Trump, or any of his White House staff, had tried to intervene in the DoJ's into possible anti-trust issues that could arise from the tie-up

The DoJ approved the deal in July, however, after both Sprint and T-Mobile agreed to sell $5 billion in prepaid wireless and spectrum assets to Dish Network Corp. (DISH) - Get Report.

Dish Network shares leaped 5.5% higher to $38.90 each following the release of Judge Marrero's ruling.