Sprint (S) - Get SentinelOne Inc. Class A Report shares traded sharply lower Tuesday, while T-Mobile US (TMUS) - Get T-Mobile US Inc. Report slipped into negative territory, after a group of ten U.S. state attorneys general will file a lawsuit to prevent their proposed $26 billion tie-up.
Reuters first reported the filing plans amid an ongoing probe by the U.S. Department of Justice into possible anti-trust issues that could arise from the merger. Last month, Federal Communications Commission Chairman Ajit Pai said he would approve the tie-up, and recommend 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.
"Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers," the suit contended. "If consummated, the merger will eliminate the competition between Sprint and T-Mobile."
Sprint shares fell 5.24%by mid-afternoon trading to change hands at $6.69 each, while T-Mobile traded 1.6% lower on the session at $75.44.
Last week a group of U.S. Senators led by Presidential candidate Elizabeth Warren asked the DoJ to disclose whether President Donald Trump, or any of his White House staff, had tried to intervene the Department's investigation.
"In light of the potential implications of this transaction for American consumers, we write to reiterate that the department's decisions should be based on an impartial analysis of the facts and the law, and must be entirely free of improper political influence," the Senators, including Warren, Amy Klobuchar and Cory Booker, wrote in a letter to the DoJ.
The merger plans have divided lawmakers over the past few months, despite the two company's 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.
Republican FCC Commissioner Brendan Carr said he would support Pai's decision, saying "Americans across the country will see more competition and an accelerated buildout of fast, 5G services" in a deal that will "strengthen competition in the U.S. wireless market and provide mobile and in-homebroadband access to communities that demand better coverage and more choices."
Democrat Jessica Rosenworcel, however, said "we've seen this kind of consolidation in airlines and with drug companies. It hasn't worked out well for consumers ... I have serious doubts."
Sprint said the deal would give it "the breadth and the depth of spectrum to provide a truly consistent national-wide 5G experience", but wouldn't provide 2020 earnings guidance until it had clarity from the DoJ investigation.