Wednesday, August 31, 2011

DOJ Blocks AT&T/T-Mobile Merger, Sprint celebrates

After much speculation, the DOJ today decided to seek to block the AT&T/T-Mobile merger. This is bad news for AT&T.

Apparently at about 11:00 AM they lost almost 4% of their value. Their merger partner, Deutsche Telecom's T-Mobile unit, didn't do so well at that time either, losing about 7% of value.

This is understandable because the merger is now more uncertain and there will be additional costs in getting the merger cleared. But can we learn anything about the impact on competitors? For Verizon, not so much (the daily return of -0.4% may mean bad news).

But Sprint shareholders received good news at about 11:00 to the tune of an almost 6% daily increase in value. This suggests that the market considers the combined AT&T/T-Mobile to be an even greater competitive threat to Sprint.

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