Our view: Let T-Mobile and Sprint link up to compete

For the third time in four years, Sprint and T-Mobile have decided to try to link up, creating a wireless combo designed to compete more vigorously with Verizon and AT&T.

The first effort ended in 2014, thanks to opposition from Obama administration anti-trust enforcers. The second ended last fall, before it was formally announced, when the two companies couldn’t agree on who would control the combined company.

Maybe the third time is the charm, as they say. The two sides have agreed that T-Mobile will be the new name, and that T-Mobile’s management will run the place. And they hope that their emphasis on building out a 5G (fifth generation) network will sell well in a Trump administration that has made 5G a priority.

The first thing to say about this proposed merger is that it is more troublesome than the AT&T-Time Warner deal that the Justice Department is trying to thwart, apparently to curry favor with President Trump, who dislikes Time Warner’s CNN unit.

The second thing to say about Sprint’s merger with T-Mobile is that it should be approved. While it would reduce the number of cellphone providers, it would still leave three major players. It fact, it would create a third major player out of two also-rans. Combined, the two companies would have about 100 million customers, roughly the same size as Verizon and AT&T.

Both T-Mobile and Sprint have said that they would plow ahead with 5G separately. But they are much smaller than their main competitors, and Sprint is loaded with debt.

Only by combining would there be a third player with the scale and resources to compete effectively in 5G, which requires a huge investment in technology and an even bigger commitment to winning over local opposition.

Critics raise a number of objections to the merger but generally fall back on the argument that all mergers are bad. In reality, some mergers among second-tier players can create stronger competition for the top-tier concerns.

The approval process in this case is a minefield, something suggested by the sell-off in Sprint and T-Mobile stocks Monday and Tuesday on the belief the deal might not go through.

The Justice Department will have to approve it, squaring its decision with its inexplicable decisions to fight the AT&T-Time Warner deal. The Federal Communications Commission will also have to give it the green light.

And, because Sprint is largely owned by Japan’s SoftBank and T-Mobile is owned by Germany’s Deutsche Telekom, the proposed deal could come under review by an interdepartmental panel that weighs the national security implications of mergers.

In the final analysis, there is no good reason to block this merger, one of the few such deals that could actually increase competition.