The decision by Mississippi's Attorney General to switch sides to support the proposed T-Mobile/Sprint merger immediately triggered questions about whether other states would follow suit.
But Mississippi is unique in its decision—and there’s little reason to suggest a slew of other states will follow in its footsteps, according to at least one Wall Street analyst firm following the developments.
"Mississippi presents something of a unique case … as a preliminary matter, we note that Mississippi got an even worse deal than Florida and arguably worse than what the FCC negotiated for the nation as a whole,” New Street Research policy analyst Blair Levin told investors in a research note Friday. “Florida got marginally better 5G coverage requirements than the FCC on a variety of metrics… Our point is that this deal, on its face, is not likely to cause any jealously in the hearts of policy makers in California, New York or the other more populous and wealthier states that remain in the litigation.”
The view at Wells Fargo Securities also was tempered. “While we view this settlement as a positive our discussions with our DC legal contacts would suggest to contain our enthusiasm,” wrote senior analyst Jennifer Fritzsche. “According to these conversations, they acknowledged while we may even see more states drop out over the coming weeks, unless a settlement is reached with NY where this originated, there will be a case commencing in December.”
Mississippi Attorney General Jim Hood originally opposed the T-Mobile/Sprint merger as part of the multi-state litigation, but earlier this week announced the state had switched sides after the New T-Mobile agreed to certain commitments, including building out 5G in rural areas and keeping $15 and $25 price plans for at least five years.
The trial involving the states, led by New York and California, that oppose the deal is set to begin Dec. 9 at the Southern District of New York court. The other entities in the opposition include Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Nevada, Texas, Illinois, Virginia, Wisconsin, Oregon, the District of Columbia and Pennsylvania.
States that are with the U.S. Department of Justice (DoJ) in supporting the settlement that would see Dish Network become a fourth national operator include Kansas, Louisiana, Nebraska, Ohio, Oklahoma and South Dakota. Last week, Florida joined the list after getting commitments from the company.
Among the states that sued to block the deal, Mississippi is the only one that voted heavily for Trump but it has a Democratic Attorney General, Levin said in his note. It’s also the only one with an Attorney General—Jim Hood—who’s currently running for governor, and the election is November 5 of this year.
SCOOP: @TMobile @sprint legal team predicting more state AGs will drop out of case to upend merger, targeting GOP AG @KenPaxtonTX to support deal and will look to pick off any state other than lead plaintiffs NY Calif as Dec 9 trial date looms more now @FoxBusiness @LizClaman— Charles Gasparino (@CGasparino) October 10, 2019
Texas remains an interesting case; its Attorney General is a Republican and it could switch sides as well, but the New Street analyst doubts that will happen, in part because the Texas Attorney General is leading the antitrust investigation against Google.
The cost for T-Mobile in turning states is only going up with each legal filing, not down, he noted. All in all, the odds of settlement or getting enough states to change the odds at trial are low, and “we think at this point the odds depend on the states’ sense of the strength of their case. We believe they believe it is more than strong enough to justify proceeding but we look forward to reading various pleadings from both sides to determine whether, in light of discovery, that remains the case.”
Meanwhile, new comments were filed with the DoJ's Antitrust Division in relation to the Tunney Act. The Communications Workers of America (CWA) union has been opposed from the get-go, and in comments filed Thursday, it argued that the divestiture outlined by the DoJ with Dish would create T-Mobile’s largest customer, not a competitor.
A group of economists also filed comments (PDF), concluding that the deal as proposed is going to be bad for consumers. “Even if Dish meets its commitments to build a 5G network covering 70 percent of the population—and we are highly skeptical that Dish will ever build out its network—it still would not replace Sprint, which currently reaches over 90 percent of Americans,” they wrote.