Sprint Corp. executives encountered resistance from Justice Department antitrust officials to a potential acquisition of T-Mobile US Inc., according to a person familiar with the matter.
Sprint argued during a meeting this month with senior antitrust officials that a merger with T-Mobile would allow more aggressive competition with larger rivals AT&T Inc. and Verizon Wireless, according to the person, who asked not to be identified because the talks are confidential. Justice Department officials weren’t convinced, the person said.
SoftBank Corp., the majority owner of Sprint, is in direct talks with T-Mobile owner Deutsche Telekom AG to resolve obstacles to a potential deal, people with knowledge of the matter said this month. An agreement could still take months to reach, one of the people said.
T-Mobile Chief Executive Officer John Legere said in a Bloomberg TV interview that a merger with Sprint, based in Overland Park, Kansas, may help the company challenge the “duopoly” of Verizon Wireless and AT&T by providing more resources.
Justice Department spokeswoman Gina Talamona, Sprint spokesman John Taylor, Anne Marshall, a spokeswoman for Bellevue, Washington-based T-Mobile, and Mitsuhiro Kurano, a spokesman for Tokyo-based SoftBank, all declined to comment about the meeting with department officials. The meeting was reported earlier by the Wall Street Journal.
Since taking the helm at T-Mobile in 2012, Legere, 55, has introduced more aggressive pricing and abandoned industry practices, such as requiring customers to sign long-term contracts. In the process, T-Mobile has reversed a subscriber exodus and won market share.
Those successes have raised speculation that regulators would block a merger with Sprint, fearing that the industry would lose its most aggressive competitor.
The Justice Department in 2011 challenged AT&T’s proposed $39 billion purchase of T-Mobile, arguing that reducing the mobile market from four to three national players would limit competition and lead to higher prices for consumers. The government also credited T-Mobile for keeping competitive pressure on rivals.
T-Mobile is a “self-described ‘challenger brand,’ that historically has been a value provider” and “places important competitive pressure on its three larger rivals,” antitrust officials said in a court filing at the time. Dallas-based AT&T abandoned its bid less than four months after the Justice Department sued to block the deal.