Sprint Stock Rises on Proposed Block of AT&T, T-Mobile Deal

**Waqas** · August 31, 2011

Competition from a strong fourth player would help the consumer, the U.S. Justice Department argued in its filing to block the AT&T-T-Mobile merger on Wednesday.

Although that reasoning may be up for debate, there’s no doubt that the government’s move has been good for SprintNextel, which applauded the news as a “decisive victory for consumers, competition and our country.” Since the announcement, the company’s stock has received a boost, jumping as high as 8% in morning trading.

That performance is the mirror image of AT&T, whose stock has fallen. T-Mobile parent company Deutsche Telekom’s American depositary receipts fell as much as 6.4%, according to Bloomberg. For its part, Verizon’s stock has remained flat or down slightly.

The government’s action is the latest good news for Sprint, which posted disastrous second-quarter results in July and saw its stock fall 20% in a day. The other positive development for Sprint is the expected availability of the iPhone 5 for Sprint customers in October, news that sent Sprint’s stock up 10%.

Roger Entner, principal at telecom analyst Recon, says that Sprint would have probably gotten a lot of T-Mobile’s customers even if the merger went through. “T-Mobile is a dead man walking either way,” Entner says. “You have a carrier that has been losing customers for more than a year and is probably going to continue that because their parent company has basically said ‘we’re not interested in being in this market.’ ”

Entner says that the movement of Sprint’s stock is “irrational,” although Sprint’s stock price had previously been “irrationally depressed.”

More About: att, iphone, SprintNextel, T-Mobile, verizon

For more Business & Marketing coverage: