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Sprint stock falls 10% on report T-Mobile merger is unlikely to be approved as currently structured

Key Points
  • Sprint's stock fell 10% after hours Tuesday following a Wall Street Journal report that said the carrier's merger with T-Mobile was unlikely as currently structured.
  • Sprint and T-Mobile have argued that the merger is necessary to compete with the two largest carriers in the U.S., AT&T and Verizon.
  • The companies also said the merger will help Sprint and T-Mobile provide greater access to 5G.
A woman talks on her phone as she walks past T-mobile and Sprint wireless stores in New York.
Brendan McDermid | Reuters

The Justice Department is unlikely to approve a planned $26 billion merger between T-Mobile and Sprint, The Wall Street Journal reported Tuesday.

Staffers from the Justice Department have reportedly told both carriers that the deal may not be approved under its current structure, the Journal reported, citing people familiar with the matter.

Reuters later confirmed the report with one person familiar with the matter, who cautioned that a final decision has not been made.

VIDEO3:3403:34
T-Mobile, Sprint deal unlikely in current form, says DOJ

Shares of Sprint plunged as much as 12% in after-hours trading following the report, while T-Mobile fell more than 4%.

A spokesman for Sprint declined to comment to CNBC. The Justice Department did not immediately respond to a request for comment.

About a year ago, T-Mobile and Sprint announced they had reached an all-stock deal to combine the companies. Shareholders of both companies approved the deal in October, which later received national security clearance.

But the deal's greatest regulatory hurdle was that it would combine the third- and fourth-largest wireless providers in the U.S., a market with only two other participants: AT&T and Verizon.

Shares of Verizon slipped about 1% in postmarket trading Tuesday, while AT&T edged 0.6% lower.

Both Sprint and T-Mobile have argued that the merger is necessary to compete with the two larger carriers. The companies also said the merger will help Sprint and T-Mobile provide greater access to 5G.

Critics of the merger have argued it would lead to job loss, decreased competition and increased prices for consumers, especially in rural America.

In February, T-Mobile CEO John Legere defended the deal before Congress, asserting that the deal would create jobs and lower prices.

Read the full report in The Wall Street Journal.

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So what is 5G?