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Sprint and T-Mobile merger faces hurdles despite DOJ approval

Investors in California and around the country who follow developments in the technology sector will likely know that tT-Mobile and the Kansas-based Sprint Corporation have been involved in merger talks since April 2018. The proposed deal seemed destined to fail due to regulatory concerns about rising prices, but the U.S. Department of Justice changed its position and approved the merger on July 26 after the satellite television company DISH Network entered the picture.

DISH helped the merger to obtain DOJ approval by agreeing to pay $5 billion to get a foothold in the prepaid wireless service market. Industry analysts praised the move because the pay television market is contracting while the wireless sector is experiencing robust growth. DISH will acquire Virgin Mobile, Boost Mobile and Sprint prepaid from Sprint and 20,000 cell towers from T-Mobile. A DOJ representative said that DISH entering the market is good news for consumers because it will free up large amounts of the broadband spectrum that is currently unused or underused.

However, few experts believe that the deal will be closed quickly. While T-Mobile and Sprint have vowed to put off any price increases for at least three years, the proposed merger still faces a number of thorny legal obstacles. A lawsuit filed by the attorneys general of 14 states claims that the deal will cost consumers more than $4 billion. Sprint and T-Mobile will have to settle this litigation or argue successfully that it should be dismissed before the deal can be signed.

The issues T-Mobile and Sprint are dealing with are common in mergers and acquisitions even when billions of dollars are not at stake. Attorneys with experience in this area may identify potential regulatory or legal roadblocks during the due diligence stage. They could then take action to address the problems before talks break down.

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