Four U.S. states join lawsuit to stop T-Mobile-Sprint deal

Four more U.S. states joined an unusual effort by state attorneys general to stop T-Mobile US Inc’s acquisition of Sprint Corp, a New York official said at a court hearing on Friday.

Hawaii, Massachusetts, Minnesota and Nevada will be included in an amended complaint being filed Friday, said Beau Buffier, chief of the antitrust bureau in the New York attorney general’s office.

Lawyers for the states and the companies also proposed Oct. 7 for the start of a trial, which could last two to three weeks.

Sprint was down 5.9% percent around midday on Friday while T-Mobile had slipped 2.3%.

The four states join 10 state attorneys general, led by New York and California and including the District of Columbia.

They filed a lawsuit on June 11 aimed at stopping the purchase by No. 3 U.S. wireless operator T-Mobile of No. 4 Sprint, saying the deal would cost their subscribers more than $4.5 billion annually. The attorneys general from all of the states involved are Democrats.

If the acquisition is completed, the number of U.S. wireless carriers would drop to three from four, with Verizon Communications Inc and AT&T Inc leading the pack.

The Federal Communications Commission has indicated it is prepared to approve the transaction, and the Justice Department is expected to weigh in soon.

U.S. District Judge Victor Marrero signaled the case could be affected if the U.S. Department of Justice, which is not involved in the lawsuit, decides to intervene.

“The elephant not in the room is the Justice Department,” Marrero said, referring to his courtroom. “Either way, it is likely to affect what is on the table.”

Marrero also noted a possible inconsistency in the states’ complaint. He said they maintained that aggressive competition among the four national wireless carriers have resulted in “falling prices,” only to then say the companies’ ability to signal each other on rates “has led to higher prices for consumers.”

George Cary, who represents T-Mobile, told the judge the transaction would benefit competition. “It is taking two smaller companies, putting together complementary resources,” he said.

Discussing the prospect that the federal government might intervene, Cary said, “We don’t think that what the Justice Department does here is going to affect the pro-competitive nature of this deal.”

FCC chairman Ajit Pai on Friday criticized the states’ lawsuit as “misguided,” arguing it will harm efforts to boost next-generation 5G wireless access.

“Make no mistake about it, government officials trying to block this transaction are working to stop many upstate New Yorkers and other rural Americans from getting access to fast mobile broadband,” Pai said in a speech in New York in which he argued that Sprint would not be able to build a 5G network alone.

“If the T-Mobile/Sprint transaction is approved, the combined company will have the capacity to do just that,” he said.

T-Mobile, which is about 63% owned by Deutsche Telekom AG, has about 80 million customers. Sprint, which is about 84% owned by Softbank Group Corp, has some 55 million customers.