Sprint has been investigating a potential purchase of rival wireless carrier T-Mobile, but it looks like some tough federal opposition might make the company reconsider its plans. According to The Wall Street Journal, Sprint Chairman Masayoshi Son and CEO Dan Hesse met with the FCC and the Justice Department last week — and found themselves shocked by the opposition the deal is expected to face. Last week, FCC Chairman Tom Wheeler expressed his skepticism that a potential deal would gain regulatory clearance, but it still seemed likely that the two carriers would try and push the deal forward. However, it now seems like Sprint will take some time to consider how to best put together a strategy and arguments that'll sway regulators in its favor — or possibly give up on the potential deal entirely.
It's just the latest evidence that Sprint and T-Moble will face an uphill battle — the DOJ already warned Sprint that a potential deal would face "intense scrutiny" and a host of potential regulatory difficulties. Public interest groups as well as the FCC have said that the wireless world needs more competition, not less, so Sprint will need to convince regulators that it'll better be able to match up with companies like Verizon and AT&T if the merger goes through. While a Sprint / T-Mobile merger would make it a three-carrier market in the US, it's arguable that a more powerful Sprint would actually provide true competition to Verizon and AT&T. However, T-Mobile's already been somewhat successful at disrupting the US wireless market on its own, so regulators might not be eager to quickly take the carrier out of the equation.