Analyst company MoffettNathanson warned a potential legal challenge from state officials could reduce the likelihood of T-Mobile US and Sprint gaining federal approval for a planned merger.
Though the operators’ arguments in favour of the deal have remained the same, MoffettNathanson said the political climate has shifted. Its announcement followed a report by Bloomberg that up to 16 state attorneys general could sue in federal court to block the transaction.
In a note to investors, MoffettNathanson said such action “raises the odds” that the US Department of Jutice (DoJ) would reject the deal to avoid a potentially “embarassing reversal” later on.
The DoJ in February lost a bid to retrospectively block AT&T’s acquisition of Time Warner.
MoffettNathanson also pointed out the deal has yet to clear all state approvals, with three of 19 remaining. Though it cleared a major hurdle in earning a nod from officials in New York in February, a green light from California still outstanding: “It’s not clear how the deal could move forward if a state the size of California blocked it; separating a network (and a customer base) along state lines would be incredibly difficult.”
In addition to approvals from the DoJ and state officials, the deal must also be cleared by the Federal Communications Commission.Subscribe to our daily newsletter Back