Analyst says T-Mobile-Sprint merger could be doomed

T-Mobile CEO John Legere keeps insisting that the deal will close during the first half of this year. But according to ECN, analysts at MoffettNathanson have reduced the odds of getting the deal approved to 33% from 50%. Craig Moffett, the firm's senior analyst, says, "It’s time to acknowledge that the odds of the deal are less than a coin toss."

Those against the deal point out that it will reduce the number of major wireless carriers in the states to three from four. This group fears higher wireless pricing because of the reduced competition, and worries about jobs getting cut as the two firms merge. Meanwhile, T-Mobile says that the merged company will add jobs from day one. Both T-Mobile and Sprint say that the merger is needed to keep America competitive in the new global 5G economy. In addition, one could make the argument that a merged T-Mobile-Sprint would be even greater competition to Verizon and AT&T, thus preventing the two largest carriers from raising their prices.

The deal has turned political with approval of the deal seen as a "Republican" move in favor of big business. Several states are reportedly considering filing an antitrust suit in federal court to block the merger. Speaking of politics, T-Mobile was criticized earlier this year when it was discovered that the company spent $195,000 for rooms and services at the Trump International Hotel in Washington D.C. The optics were not good for T-Mobile because it appeared as though the carrier had its executives stay at the hotel only to curry favor with the president so that he wouldn't be inclined to block the deal.

Moffett believes that the DOJ will block the deal anyway. The analyst says that if the agency follows its own guidelines, it would be forced to prevent the merger from taking place. T-Mobile does not have a good history in closing transactions. Back in 2014, Sprint and T-Mobile floated the idea of a merger before both the DOJ and FCC and were basically shot down by the regulatory agencies before a deal was even announced. Four years before that, AT&T announced a $39 billion purchase of T-Mobile. Pressure from the FCC and DOJ forced AT&T to back away from the transaction. As a result, AT&T gave T-Mobile $3 billion, a seven-year 3G roaming deal, and 128 markets AWS markets. Some mark the beginning of T-Mobile's ascension back to this agreement that it made with AT&T.