Texas Drops Out of Antitrust Case Targeting T-Mobile-Sprint Merger

(CN) – Texas is withdrawing from a multistate antitrust lawsuit seeking to block a proposed $26.5 billion merger of telecommunication giants T-Mobile and Sprint that critics say would raise prices for consumers, particularly those in rural areas who already struggle with access to high-speed internet.

A woman using a cellphone walks past T-Mobile and Sprint stores on April 27, 2010, in New York. (AP Photo/Mark Lennihan)

The move follows similar retreats from state attorneys general in Colorado and Mississippi, which each announced settlement deals to exit the litigation in October.

Texas Attorney General Ken Paxton said Monday the state had reached a settlement of its part of the dispute with T-Mobile that will prevent the new version of the company from raising consumer prices in Texas for five years, should the proposed merger go through.

Paxton’s office did not immediately provide a copy of the settlement, but said the agreement will guarantee the merged company’s customers in Texas have access to mobile phone plans that are “the same or better” as current T-Mobile plans for five years after the merger is completed.

“Our objectives in joining the initial lawsuit were to protect Texans from unnecessary price hikes and to ensure that Texans living in both urban and rural areas will not get stuck with substandard service as the market for wireless telecommunication services evolves to adopt new standards of technology with the power to transform the Texas economy,” Paxton said in a statement. “This agreement achieves those objectives.”

The settlement would also require the merged companies to build out 5G broadband infrastructure across Texas over the next six years, Paxton’s office said, with a commitment to bringing 5G to most rural Texans within the next three years.

The departure of Texas from the case comes after the Justice Department this summer approved the proposed merger, with the stipulation that Sprint would divest its prepaid services, including Boost Mobile and Virgin Mobile, to the satellite television company Dish Network.

T-Mobile did not immediately respond to a request for comment on the Texas settlement, but the company’s CEO John Legere called the announcement “incredible news” in a Twitter post on Monday.

“Texas knows that the #NewTMobile will create jobs and deliver 5G to rural areas of the state and beyond!” Legere wrote.

The advocacy group Rural Wireless Association, which is not directly involved in the litigation, has spoken out against the merger, saying the move would lead to the combined companies having “little incentive to try and win over customers, like Sprint and T-Mobile do on a daily basis today.”

Carri Bennet, the association’s general counsel, said the Texas settlement “doesn’t look like much of a deal.”

Bennet called the promise to greatly expand 5G coverage in Texas “unrealistic,” as many rural parts of the state still don’t have access to 3G or 4G networks.

“Looks like political pressure and AG Paxton scrambling to make it look like he got something for Texans,” she said. “Without more details, I would call it the Emperor’s new clothes.”

A trial in the merger lawsuit is set to begin Dec. 9.

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