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Sprint Takeover Bid for T-Mobile Looking Less Likely

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USA based Sprint is reportedly cooling on a possible bid for its smaller rival T Mobile as regulators are said to be worried about the deal.

Antitrust officials have recently expressed strong sentiments against a deal publicly, causing Sprint to review its plans, the Wall Street Journal reported, citing people familiar with the matter.

Sprint Chairman Masayoshi Son and Chief Executive Dan Hesse have met with various regulatory officials in recent weeks but were said to have been surprised at the level of hostility to the deal being expressed, which was far greater than they had expected.

Bill Baer, head of the Justice Department's Antitrust Division reiterated a general wariness toward wireless consolidation in a speech to the New York State Bar Association.

While the regulators are said to be concerned that the market could end up consolidating into three large players, Sprint and T-Mobile USA are themselves said to be worried that they lack the scale necessary to compete with the big two -- AT&T and Verizon -- effectively leaving the market as a duopoly.

AT&T and Verizon Wireless control two-thirds of the country's wireless subscribers, and take almost all of the industry profits.

The argument being put forward is that the merger of T-Mobile and Sprint would be less about cutting four networks down to three, but expanding the market from two dominant players to three equal competitors.

Shares in both companies fell today on the reports as investors also accepted that a merger was looking less likely.

On the web: Wall Street Journal

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Tags: sprint  t-mobile usa  USA