T-Mobile/Sprint Hill Hearing Set; Economist Finds Antitrust Concerns; Deal Called Different From AT&T/TW
The first congressional hearing on T-Mobile's proposed merger with Sprint was set Wednesday. Earlier that day, a free-market economist found some investor concerns the deal would pass antitrust muster. And an analyst said the deal is different from AT&T/Time Warner. Comcast meanwhile said it's preparing an offer for most of 21st Century Fox assets (see 1805230019).
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Senate Judiciary Antitrust Subcommittee Chairman Mike Lee, R-Utah, and ranking member Amy Klobuchar, D-Minn., set a June 27 hearing on T-Mobile/Sprint. That was expected (see 1804300057 and 1805110005). “Few industries touch Americans’ daily lives as much as the wireless market,” Lee said. “I want to make sure that the proposed merger between T-Mobile and Sprint benefits consumers in a manner consistent with existing antitrust law.”
T-Mobile/Sprint “raises serious antitrust issues,” Klobuchar said. “Competition among the four largest cell phone carriers has led to lower prices, better service and more innovation. That’s why it’s critically important that we hold a hearing to ask serious questions about how this consolidation could affect American consumers.” Senate Antitrust didn't release further details on the planned hearing by our deadline Wednesday.
Wall Street seems to be voting that the deal won’t go through, an economist suggested. The possibility of a takeover drove up the stocks of both companies, but then the deal was announced, the Phoenix Center said. Monday “April 30, Sprint’s stock price fell 13 percent (much of that in after-hours trading on the 27th), losing an additional 3.4 percent on Tuesday, and another 3.9 percent on Wednesday. Thus, the price appreciation was all given back by Wednesday. T-Mobile’s price plummeted 5.5 percent on Monday, 2 percent on Tuesday, and 3.5 percent on Wednesday.” Chief Economist George Ford said: “Given the change in industry concentration, the presumption by the antitrust authorities will be that the merger is anticompetitive.”
BTIG’s Walter Piecyk sees big differences between AT&T/TW and T-Mobile/Sprint, as some see possible commonalities in how the government may respond especially based on the outcome of a court decision on the first deal June 12 (see 1805220015). “AT&T Time Warner is vertical,” the analyst emailed us. “Sprint/T-mobile is horizontal. Period.”