Shares of Sprint plunged sharply on Monday and were even interrupted for a brief period following conflicting messages from regulators regarding the company’s projected merger with T-Mobile.
Initially, the companies committed to helping the mobile broadband in rural America expand faster and hence the recommended approval came by the Federal Communications Commission of the $26.5 billion merger. Following the news, Sprint’s shares jumped about 27% and T-Mobile’s shares popped almost 7%.
But soon after, the said companies received discouraging messages from the Department of Justice (DoJ) over antitrust issues that could potentially threaten the merger. The DoJ has a different statutory mandate that may not resolve antitrust concerns regarding the deal.
Following this news, Sprint shares were halted for a brief period but resumed trading nearly 12% up. However, it was still short of its 27% gain at its high point Monday. The stock ended the day up 18.8%. Shares of T-Mobile were up 3.9% by Monday’s market close.
The reason behind the merger for both the companies was to compete with rivals AT&T (T) and Verizon (VZ), and help roll out next-generation wireless service, 5G. But some politicians and public-interest groups have raised pricing and antitrust concerns about the deal. Previously, the Obama administration has also thwarted the merger on grounds of negative competition.