An expert witness for the group of states suing to block T-Mobile US Inc.’s (TMUS) purchase of Sprint Corp. (S) testified on Wednesday, Dec. 11, that counter to the carriers’ pledge to reduce prices, the post-merger company would likely lose its zeal for price competition and drive mobile bills higher.
University of California at Berkeley economics professor Carl Shapiro said wireless customers could pay an extra $8.7 billion per year because of reduced competitive pressure following the deal. By analyzing the head-to-head competition between the companies, their profit margins and the prices for their plans, Shapiro put the added price to T-Mobile and Sprint subscribers at $4.6 billion.
Sprint and T-Mobile say the $43 billion they save by combining will allow them to reduce cell phone bills and take more market share from AT&T and Verizon. Timotheus Höttges, CEO of T-Mobile parent Deutsche Telekom AG and chairman of T-Mobile’s board, told the U.S. District Court in Manhattan on Tuesday that, “Our DNA is very aggressive.”
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