Texas joins states suing to stop T-Mobile, Sprint deal as trial delayed

U.S. states suing to stop T-Mobile US Inc’s $26 billion merger with Sprint Corp won two victories on Thursday as Texas’ Republican attorney general joined 14 Democrats, adding political depth to the group, and a judge agreed to give states until December to make their case.

Texas’ decision, which brings the sole Republican on board, is a victory for the state attorneys general. The trial delay and a ruling giving states ample room to seek evidence were additional wins for the deal’s opponents, given the difficulty and cost of pursuing an acquisition during a lengthy court fight.

“Every day we can’t integrate puts us a day behind the competitive race,” David Gelfand, a lawyer for T-Mobile, told the court, objecting to the postponement.

With Texas, there are now 14 states and the District of Columbia seeking to stop the merger of the No. 3 and No. 4 wireless companies.

“We welcome Texas’ resolve to block this anticompetitive merger, and are pleased to announce that Attorney General Ken Paxton will assume a key leadership role in this case, along with (California) Attorney General (Xavier) Becerra and myself,” said New York Attorney General Letitia James in a statement.

The U.S. Justice Department has signed off on the merger and the Federal Communications Commission has indicated that it will formally approve the proposed transaction.

Magistrate Judge Robert Lehrburger, who is assisting Judge Victor Marrero in the case, ordered the delay during a hearing on Thursday after the states said they needed time to consider a deal struck by the Justice Department approving the merger with the sale of some assets.

The case had been expected to be heard beginning on Oct. 7, and was expected to last two to three weeks. It is now set for Dec. 9.

Under the Justice Department deal announced a week ago, the companies would divest Sprint’s prepaid businesses, including Boost Mobile, to satellite television company Dish Network Corp, and provide it with access to 20,000 cell sites and hundreds of retail locations. That deal is worth about $5 billion.

Prepaid wireless phones are generally used by lower-income earners who cannot pass a credit check.

The states involved in the lawsuit have said that the divestiture negotiated by the federal government to position Dish as a fourth wireless carrier was inadequate to protect consumers.

The state attorneys general asked for 150 total hours for deposition, while T-Mobile and Sprint argued it should be limited to 60. Lehrburger ruled that the states would have 140 hours to depose potential witnesses.

Lehrburger also ruled that documents from outside parties would be classified as confidential or highly confidential, and that only T-Mobile and Sprint’s external counsel could have access to the latter.

“You’re talking about information that goes to the heart of competition and business dealings,” Lehrburger said, in response to arguments from T-Mobile that its inhouse counsel needed to be closely involved.