Sprint Nextel Corp., the third-largest U.S. mobile-phone carrier, rose 5.9 percent after the U.S. government sued to block rival AT&T Inc.’s proposed $39 billion acquisition of T-Mobile USA Inc.
Sprint Nextel jumped 21 cents to $3.76 at 4 p.m. in New York Stock Exchange composite trading. Shares of the Overland Park, Kansas-based company had slumped 16 percent this year before today.
The Justice Department, in a complaint filed today in federal court in Washington, said the AT&T deal would “substantially lessen competition” in the wireless market. Sprint Chief Executive Officer Dan Hesse has been lobbying U.S. regulators to block the acquisition for being anti-competitive, and has made regular trips to Washington since the deal was announced in March.
The Justice Department’s decision is a “victory” for Sprint, according to Steve Clement, an analyst at Pacific Crest Securities Inc. in Portland, Oregon. If a deal with AT&T is barred, it may allow Sprint to merge with T-Mobile, said Clement, who has an “outperform” rating on Sprint shares.
“They’re both sub-scale relative to the big guys, so it makes sense to find a way to get together and extract the synergies you’d get longer-term,” Clement said in an interview.
The U.S. is seeking a declaration that AT&T’s takeover of T-Mobile, a unit of Deutsche Telekom AG, would violate U.S. antitrust law and a court order blocking any arrangement implementing the transaction.
If T-Mobile and AT&T were to combine, the new company would surpass Verizon Wireless as the largest wireless provider in the U.S. AT&T is the second largest mobile-phone carrier by total number of customers, and T-Mobile is fourth.
Sprint filed a 377-page petition with the Federal Communications Commission on May 31 asking regulators to reject the deal on grounds that it would decrease competition and raise consumer prices. Sprint has said it would struggle to offer competitive pricing and cutting-edge technology if the proposed acquisition is completed.
AT&T said a deal would help consumers by allowing the Dallas-based company to expand its 4G network, invest in new technology and add thousands of U.S. jobs. AT&T plans to “vigorously contest” the Department of Justice’s decision in court, the company said today.