US Justice Department said to be investigating Sprint-T-Mobile merger

T-Mobile and Sprint are approaching a potentially significant hurdle in the way of their proposed merger as the U.S. Department of Justice examines how the deal could affect smaller wireless operators.

According to Reuters, who cite people familiar with the matter, the Justice Department has been gathering the opinions of smaller wireless operators who buy wholesale access to the bigger wireless networks.

Investigations such as the one being undertaken were always anticipated and are a normal part of the process mergers have to go through. The Reuters article makes no mention of whether the investigation is likely to result in problems with the merger, although the deal had previously been expected to gain approval.

The investigation is most likely looking into whether the merger could lead to higher prices in the prepaid market in which Sprint and T-Mobile have a 54 percent combined market share. Higher prices would be especially problematic as prepaid services are mainly used by lower-income consumers.

Those who support the deal think that that the merger could help break the dominance of AT&T and Verizon, the two main carriers in the U.S. In the fourth quarter of 2017, the two companies made up almost 70 percent of the total wireless subscription market share.

Sprint and AT&T claim that the merger will help them deliver the world’s fastest 5G network and create thousands of jobs.

The deal itself will see the two companies merge under the name T-Mobile. It is expected to close in early 2019.

Next up: What would the Sprint T-Mobile merger mean for you?