KEY POINTS

  • Sprint sees a 60% jump in its stock price Monday on news of a judicial ruling in favor of its merger with T-Mobile
  • T-Mobile's stock rises 9% on the same news
  • Deutsche Telekom wants to reduce the deal price, however

Sprint Corporation saw its stock skyrocket an incredible 68%, hitting $8.28 at 7:30 p.m. ET in extended trading Monday after opening at $4.92. The stock settled at $8.09 30 minutes later. T-Mobile’s stock rose over 9% to hit a high of $93.50 in after hours. It opened at $85.41. The cause: a federal judge is expected to approve the companies' merger.

U.S. District Judge Victor Marrero is expected to rule against the lawsuit filed by a group of state attorneys-general impeding Sprint's $26.5 billion merger with T-Mobile. The verdict confirming the merger will be announced Tuesday morning, the Wall Street Journal reported.

Sprint is America's third largest wireless carrier and T-Mobile the fourth. The lawsuit against the merger argued it would raise prices for Americans (especially those that use prepaid plans popular with people saddled by poorer credit), while throttling competition by reducing the number of industry competitors to three from four. The other two carriers are number one Verizon Communications Inc. and number two AT&T Inc.

On the other hand, Sprint and AT&T contend the merger is necessary to help them install 5G mobile technology nationwide. The merger will also allow them to better compete against Verizon Inc and AT&T.

Analysts said T-Mobile and Sprint are expected to start talks on renegotiating the terms of their $26.5 billion merger immediately after the legal decision is handed down by the court. They said Deutsche Telekom, T-Mobile’s parent firm, wants to trim down the price of the deal since Sprint’s fortunes have soured since they initially signed their agreement in 2018.

This disagreement among the nascent partners doesn't mean a renegotiated deal is in the cards, however. For its part, Sprint is expected to argue T-Mobile needs it to grow its U.S. business and to boost its capacity using its spectrum.

In 2019, Sprint and T-Mobile secured approval for the troubled merger from the U.S. Department of Justice and the Federal Communications Commission (FCC) both firms made concessions to federal regulators.

Analysts said the new T-Mobile will have more than 90 million U.S. customers. T-Mobile aims to seize more subscribers from AT&T and Verizon. The three companies will dominate the U.S. wireless market but will also compete against newcomers, including cable companies that resell service from large carriers.

Judge Marrero’s expected approval will allow T-Mobile and Sprint to begin combining their network infrastructure, stores and workforce. T-Mobile has promised customers of the combined company will have the same or better rate plans for three years after the deal.

The T-Mobile-Sprint merger would merger the third- and fourth-largest wireless carriers in a tie-up challenged by Democrats and consumer activists The T-Mobile-Sprint merger would merger the third- and fourth-largest wireless carriers in a tie-up challenged by Democrats and consumer activists Photo: AFP / Alastair Pike