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Mobile phone merger reveals deeper problems

Many California companies look at mergers and acquisitions as an important way to enhance or expand their business portfolios. However, publicly traded companies or firms in certain industries may find that government regulations could stymie their plans to merge. Two national wireless carriers, Sprint and T-Mobile, are facing obstacles that could derail their planned transaction.

The companies are seeking approval for their merger from the Federal Communications Commission. Sprint, in particular, said in its filings to the agency that it may not be able to remain in business if the merger plans are rejected. The company, the fourth-largest mobile carrier in the country, said that it does not have a viable or sustainable path to compete with other firms. While Sprint and T-Mobile concluded negotiations for their deal in April 2018, the plan has been plagued by lingering questions about whether it would meet with federal approval. Sprint offers the lowest prices of the major carriers, and some have noted that the merger could lead to less competition in the wireless market.

In order to help boost its standing, Sprint began recruiting new customers and phone lines. However, the company said that it did not become more profitable as a result, as many of the new lines were given for free as bonuses to existing customers. The mobile carrier said that its public statements about new customers were accurate but incomplete, presenting a more positive picture of the company's reality.

Companies that are planning mergers and acquisitions need to take into account all of the approvals that are necessary. A business and commercial law attorney can provide guidance and representation to firms throughout the process, including regulatory compliance.

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