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Odds that regulators will approve the merger of T-Mobile US (TMUS) and Sprint
(S) have improved only slightly, says a longtime telecom analyst. T-Mobile stock and Sprint stock slipped on Tuesday after posting a big rally on expectations of deal approval.XMerger approval from the Department of Justice is still uncertain, says Craig Moffett, analyst at MoffettNathanson. The Federal Communications Commission's chairman on Monday said he would approve the deal with conditions.Another problem for T-Mobile and Sprint is that California and other Democratic-controlled blue states could sue to block the deal even if it gets a green light from the FCC and DOJ, he says."The deal looks like it has crossed one important hurdle (the FCC)," Moffett said in a blog. "But that was neither the highest nor the most important hurdle. Hence, how much one should increase their expected odds of approval is unclear. Perhaps the right number is now 50/50, or even 60/40. But certainly not 80/20, or 90/10, as seems to be today's prevailing wisdom."DOJ Staff Opposed To T-Mobile, Sprint Merger?Moffett speculated that while DOJ Antitrust Bureau Chief Makan Delrahim may be open to deal approval, the DOJ staff may be opposed. The DOJ in 2011 blocked AT&T's (T) purchase of T-Mobile.T-Mobile stock slipped 1.5% to close at 77.15 on the stock market today. Sprint stock dropped 1.6% to 7.22.Germany's Deutsche Telekom (DTEGY) controls T-Mobile. Japan's Softbank owns most of Sprint.Could California Be Last Merger Hurdle?If the Justice Department approves the Sprint/T-Mobile merger, there's still a possibility that California, New York and other states could file a lawsuit against the deal."Assuming that the merger passes the FCC by a three-two party-line vote, it will only enhance the partisanship of the recommendation, and therefore make it all the more likely that the state attorneys general for the blue states will sue in federal court to try to block the transaction if the Republican DOJ follows the FCC in approving it," added Moffett.The merger would consolidate the wireless services market to three national players from four.Paul Gallant, analyst at Cowen, says Maryland's Attorney General Brian Frosch on Monday signaled that it could oppose the merger."State AGs do have the legal authority to challenge a merger even if DOJ approves it," Gallant said in his note to clients. "And Frosch's comments indicate that state AGs are clearly thinking about doing that."Follow Reinhardt Krause on Twitter @reinhardtk_tech.YOU MAY ALSO LIKE:Is Google Stock A Buy Right Now? Here's What Earnings, Charts ShowMarketSmith: Research, Charts, Data And Coaching All In One PlaceIBD Digital: Unlock IBD's Premium Stock Lists, Tools And Analysis TodayHow To Invest In Growth Stocks: Read This Column DailyGet Free IBD Newsletters: Market Prep | Tech Report | How To InvestThe post T-Mobile Stock Rally Fades On Sprint Merger; Will Blue States Oppose Deal? appeared first on Investor's Business Daily. Weiter zum vollständigen Artikel bei "Investors Business Daily"
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