Sprint's potential merger with smaller rival T-Mobile has hit a major roadblock after strong opposition from antitrust regulators. According to The Wall Street Journal, Sprint entourage, which included CEO Dan Hesse and Softbank Chairman Masayoshi Son, met with the FCC and the Department Of Justice last week, but was “surprised by the level of opposition” the deal is expected to face.
The reason behind strong opposition from the FCC and the Department of Justice is the belief that the deal would leave the wireless world with less competition, which is not good for consumers. Currently there are four major wireless players in the US market including AT&T and Verizon.
Though there is some weight in the argument that Sprint and T-Mobile combined would give stiff competition to AT&T and Verizon, it will be an uphill task for Sprint to convince the federal regulators, especially in the wake of T-Mobile's emergence as a fierce competitor in the past year.
The Department of Justice already warned Sprint that the deal would face "intense scrutiny" and numerous regulatory difficulties. But if Sprint and T-Mobile still decide to move ahead with the deal, it could result in a repeat of the actions taken in 2011, when T-Mobile's merger with AT&T was blocked.