Sprint Corp. shares fell the most in more than six months Wednesday amid concern that a potential deal to merge with T-Mobile US Inc. would get blocked by regulators.
Executives at Overland Park-based Sprint met this month with antitrust officials at the U.S. Department of Justice about a possible T-Mobile transaction and got a cool reception, according to news reports Tuesday. The reports cited unnamed sources who asked not to be identified because the talks are confidential.
Investors and analysts have been calling for more consolidation in the industry, which is struggling with a saturated market for mobile phones. A tie-up between Sprint and T-Mobile would unite the third- and fourth-largest U.S. wireless carriers, providing a bigger competitor to market leaders Verizon Wireless and AT&T Inc.
Following reports of the Justice Department’s reaction to the meeting, Sprint shares fell as much as 6.9 percent Wednesdsay – the biggest intraday decline since the company was acquired by SoftBank Corp. last July. In mid-morning trading, the stock was down 3.8 percent to $8.52. T-Mobile fell 2.7 percent to $31.44.
SoftBank is in direct talks with T-Mobile owner Deutsche Telekom AG to resolve obstacles to a potential deal, people with knowledge of the matter said this month. An agreement could still take months to reach, one of the people said.
T-Mobile Chief Executive Officer John Legere said in a Bloomberg TV interview that a merger with Sprint may help the company challenge the “duopoly” of Verizon and AT&T by providing more airwaves and other resources.
Representatives from the Justice Department, Sprint, T- Mobile and SoftBank all declined to comment about the meeting. The Wall Street Journal reported on the event Tuesday.
Since taking the helm at T-Mobile in 2012, Legere, 55, has introduced more aggressive pricing and abandoned industry practices, such as requiring customers to sign long-term contracts. In the process, T-Mobile has reversed a subscriber exodus and won market share.
Those successes have raised speculation that regulators would block a merger with Sprint, fearing that the industry would lose its most aggressive competitor.
The Justice Department in 2011 challenged AT&T’s proposed $39 billion purchase of T-Mobile, arguing that reducing the mobile market from four to three national players would limit competition and lead to higher prices for consumers. The government also credited T-Mobile for keeping competitive pressure on rivals.
T-Mobile “places important competitive pressure on its three larger rivals,” antitrust officials said in a court filing at the time. Dallas-based AT&T abandoned its bid less than four months after the Justice Department sued to block the deal.