1/6/2024 0 Comments T mobile join togetherThe Sprint-T-Mobile merger has been the subject of a lot of 5G hype. 5G Hype Does Not Make an Illegal Merger Legal This merger's anti-competitive warnings are effectively off the charts. By some estimates that number exceeds 1,000 points in some major metropolitan markets. When two companies are merging, especially in already highly concentrated markets, the guidelines say that a merger that raises the total HHI by 100 to 200 points raises “significant competitive concerns,” and mergers that raise the index by more than 200 points “will be presumed to be likely to enhance market power.” The T-Mobile and Sprint merger blasts past the red zone and raises the market concentration numbers by 466 points nationally. This is considerably higher than 2500, the level at which the DOJ considers a market to be highly concentrated. A complete monopoly has an HHI of 100 2, or 10,000, while a highly competitive market can have a score close to 1.įor the U.S. That formula, called the Herfindahl-Hirschman Index (HHI), is calculated by squaring the market share percentages of each of the companies in a market and then adding them together. The traditional scrutiny applied to these kind of mergers under the guidelines is to measure the market share of the relevant companies and combine them using a formula that indicates concentration levels in a market. To approve this deal, the DOJ had to ignore its own guidelines. What could possibly be different about this merger? Ignoring Its Own Guidelines It was not that long ago when the DOJ said that mergers that shrunk a highly concentrated market from four competitors into three competitors “significantly harmed” consumers per their own antitrust guidelines. Here's what this merger really means: people will have fewer choices for wireless services, at higher prices, while innovation suffers. No supposed benefit to consumers is actually waiting on this merger, including any and all claims about 5G. Mergers that bring extreme levels of concentration are supposed to be blocked. The wireless market is already highly concentrated according to the Department of Justice’s own guidelines, and this merger only exacerbates the problem. A merger would give them a share of 54 percent, as per details from S&P.There is no saving grace for the federal government approving what is on its face an illegal horizontal merger between T-Mobile and Sprint. pre-paid market, while Sprint ( NYSE:S)? accounts for less than half that at percentage. T-Mobile ( NASDAQ:TMUS) dominated 38 percent of the U.S. 83 percent of the consumers of Sprint’s pre-paid brand Boost also belong to the same category. Adderton also believes that wireless wholesale prices should be formally regulated after the Sprint-T-Mobile deal.Īccording to Kagan, S&P Global Market Intelligence’s data, T-Mobile ( NASDAQ:TMUS) is the carrier of choice for consumers whose annual income is less than $75,000. Ultra Mobile and Mint Mobile are wireless pre-paid brands which rely on massive companies like T-Mobile ( NASDAQ:TMUS) and Sprint ( NYSE:S)?.įounder and former Chief Executive of Boost Mobile USA, which was acquired by Sprint ( NYSE:S)?, Peter Adderton said that a merger between the two players without providing concessions could be bad for national interest. It seems as if the government is thoroughly reviewing the situation this time.Ĭhief Executive of Ultra Mobile and Mint Mobile, David Glickman stated that he was also spoken to about the merger by the Justice Department but he did not delve into additional details. In 2011, AT&T couldn’t go ahead with its plans to acquire T-Mobile ( NASDAQ:TMUS) because the head of the antitrust division of the Justice Department didn’t want to commit to keep four carriers. There are four major wireless providers in the U.S. Justice Department and T-Mobile ( NASDAQ:TMUS) refused a request for comment on the situation, with Sprint ( NYSE:S)? not budging for comments either. However, this is nothing unusual as antitrust investigations are usually a part of the acquisition approval process for mega deals like these. They are being asked about their opinion regarding the merger. The Justice Department is in talks with various small wireless operators that pay wholesale rates for access to the main wireless networks. T-Mobile ( NASDAQ:TMUS) has proposed to buy Sprint ( NYSE:S)? for $26 billion. The merger of Both T-Mobile & Sprint Could End up Giving Them a Market Share of 54 Percent
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