American telecommunications company, Sprint, treads water after a less than satisfying earnings report and a failed merger with buyer-in-waiting T-mobile. It seems that the two company’s’ stocks are running opposite directions as Sprint stocks fall, while T-mobile rises.
While Sprint stocks did spike up Monday, after Federal Communications Commission (FCC) gave the $26 billion all-stock mergers a signal, the Department of Justice (DOJ), to the dismay of Sprint, thought otherwise and halted the intended union between the two companies.
Much of the decision by the DOJ to block the merger is due to antitrust concerns that may be brought about by the merger of the third and fourth largest telecommunications company in the US.
S stocks have been jumping up and down this week when it surged up 19% this Monday upon FCC’s approval of the merger, but fell back more than 3% Wednesday, upon the DOJ’s call to stop the merger. It is yet to be known if political appointees within DOJ will decide to file a suit against the agreement, but both companies are in active talks with the Justice Department.
Given the struggle of Sprint’s 5G network’s ability to cater nationwide, the company seems to be in deep trouble with analysts fearing that Sprint stocks can no longer be offered as an investment option for shareholders; at least not without the assistance of T-Mobile.
It seems clear that one way or the other, Sprint has to make a deal with healthier businesses to remain relevant to the industry. Just to put into perspective, regardless of whether the merger happens or not, the US most likely still be left with three existing telecommunications companies that do not favor the industry. Higher prices on telecommunications services are expected to rise, while jobs are expected to be lost. While it remains to be seen what regulators will decide on, it seems that there are challenges up ahead for the telecom industry.
