August 3, 2005 5:05 PM PDT

Feds approve Sprint-Nextel merger

Two federal agencies on Wednesday approved the megamerger of U.S. cell phone operators Sprint and Nextel Communications.

The thumbs-up by the Federal Communications Commission and the Department of Justice's antitrust division means the last major hurdle has been cleared for Sprint's proposed $35 billion purchase of Nextel.

While reducing the number of major U.S. operators from five to four, both agencies concluded the merger will not diminish competition.

"Carrier conduct will remain sufficiently competitive to ensure that market performance will not be impaired, and, given the expected benefits, the public interest will be enhanced on balance," the FCC said in a statement.

The Department of Justice reached the same conclusion, according to a statement it released Wednesday. "Purchasers of mobile wireless services will continue to have a number of other carriers from which to choose after the merger," according to the statement. "None of the theories of competitive harm that the Division considered were ultimately supported by the facts."

Consumer advocates expressed concerns that mergers would hurt consumers because there is less competition, and therefore less reason for carriers to control their prices. That opinion was backed up earlier this year when executives from landline phone operators SBC Communications and Verizon Communications, which are also merging with competitors, could not rule out eventual price hikes following a series of proposed telecom mergers. SBC plans to acquire AT&T for $16 billion; Verizon is buying MCI for $6.7 billion.

Shareholders of both Sprint and Nextel overwhelmingly approved of the merger last month.

 

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