Federal judge clears $26 billion merger of T-Mobile, Sprint

A federal judge approved T-Mobile’s $26.5 billion takeover of Sprint on Tuesday, clearing the last crucial hurdle for the deal to combine the nation’s third- and fourth-largest cellular carriers.

Manhattan federal Judge Victor Marrero rejected arguments from a coalition of states led by New York and California that the merger would hurt competition in the cellular industry and force consumers to pay higher prices.

In his 173-page decision, Marrero also said he was not persuaded by the states’ concerns that Dish would not become a viable player in the market despite the satellite TV provider’s promise to build up its own wireless network.

The news led Sprint shares to skyrocket nearly 74 percent to $8.35 when the market opened Tuesday morning, while T-Mobile stock opened almost 11 percent higher at $93.70.

The lawsuit seeking to stop the blockbuster merger was one of the last major obstacles to the deal, which T-Mobile argues will benefit consumers by making it a tougher competitor against rival carriers Verizon and AT&T. The US Department of Justice and the Federal Communications Commission both approved the merger last year, but it must still get the green light from a key utility board in California.

John Legere, the pink-clad T-Mobile CEO who has been one of the merger’s loudest proponents, hailed the decision in a Tuesday morning tweet filled with exclamation marks.

“The moment we’ve been waiting for – we WON in Court!!” Legere said on Twitter. “… The new Supercharged Un-carrier will provide benefits for ALL customers & drive competition! We can’t wait!”

But New York Attorney General Letitia James slammed the ruling and said the states are reviewing their options — including a possible appeal.

“From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets,” James said in a statement.

James and 13 other attorneys general argued the combination of T-Mobile and Sprint would further consolidate the wireless industry into just three major players that would be discouraged from competing for Americans’ cellphone business.

The deal would also incentivize the new T-Mobile to hike prices, potentially costing Sprint and T-Mobile subscribers more than $4.5 billion a year, the AGs argued in their lawsuit. Officials cited studies showing that such consolidation in other countries resulted in prices rising as much as 20.5 percent on average.

The Justice Department signed off on the deal after T-Mobile agreed to sell millions of prepaid Sprint customers to Dish, which plans to build a 5G wireless network in the coming years. T-Mobile will also rent its network to Dish in the meantime.

Opponents of the merger cast Dish as a weak newcomer to the wireless market that will have to build a new network from the ground up without the experience or capability to provide effective service.

“After this merger, even under the best of very uncertain circumstances, Dish won’t fill the gap left by Sprint’s exit for years, if ever,” said George Slover, senior policy counsel at Consumer Reports.

But Dish co-founder and chairman Charlie Ergen defended his company’s bid to replace Sprint as the fourth-biggest carrier during his December testimony when the lawsuit went to trial. He said he was prepared to compete with the other carriers “from Day 1” after the merger is closed.

“[The FCC] doesn’t think Dish is a bad company like some people might want to whisper,” Ergen said then.

T-Mobile and Sprint could close the merger as soon as April 1, said Mike Sievert, T-Mobile’s president and chief operating officer, who will take over for Legere as CEO on May 1.

With Post wires