As the wireless trial of the century began this week, attorneys general from a dozen states came out strong in their effort to derail the merger of Sprint and T-Mobile in federal court in Manhattan, according to a report by New Street Research updating its clients.
“[Wednesday] we heard the states’ chief economist [Dr. Carl Shapiro] set out his analysis concluding that the deal would create multi-billion dollars of harm. If that analysis survives today’s cross examination, the path for the companies to win narrows significantly, wrote Blair Levin, policy advisor to New Street Research.
Text’s and emails from the states’ first witness was Roger Solé, Sprint CMO, called into question the validity of the synergies claimed between the two companies and raised the question whether a cable/Sprint hookup might be a better way secure a fourth competitor in the marketplace.
“The states introduced texts and mails that were helpful for the argument that the unconditioned four-to-three merger violates the law, that T-Mobile and Sprint are direct competitors, that Sprint has other options to the merger, and that the deal could result in increased prices,” Levin wrote. “In addition, the judge declined to hear opening statements and sought to curtail the witness lists, making it more difficult, in our view, for the companies to re-frame the core arguments.
“The stronger the state case on the deal, the more the companies have to rely on litigating the fix. We believe these, along with the course-of-business documents, are helpful to the states case on the impacts of the unconditioned merger,” Levin added.