What's going on?

Phone carrier Sprint announced better-than-expected earnings on Monday, but its planned merger with T-Mobile US is looking less and less likely to come to pass.

What does this mean?

Sprint reached 2019�s finish line with tired legs but an optimistic outlook: it made a loss last quarter just like it did in 2018, but that loss was both smaller than the year before and smaller than investors expected. The company�s �churn� numbers looked particularly good: the company lost 45,000 fewer subscribers than expected, thanks to the cheaper plans it offered.

Then again, those cheaper plans might have something to do with why Sprint�s revenue missed expectations � perhaps, in turn, the reason the phone carrier�s share price fell. Well, that, and the $27 billion merger that seems ready to collapse�

Why should I care?

Zooming out: Dial M for merger.
For the past two years, rival T-Mobile�s been trying to buy Sprint: the firms think they can better compete against communications juggernauts AT&T and Verizon if they team up. But US regulators are skeptical, and several states are trying to stop the deal. Unlike AT&T�s approved �vertical merger� with Time Warner � which involved two non-competing firms linking up � this deal is a �horizontal merger�, in which two direct competitors join forces. So although T-Mobile and Sprint argue they need scale to invest in 5G, the deal�s critics expect less competition to lead to higher prices for consumers.

For markets: Deal or no deal?
Investors seem to think regulators will agree with the naysayers. Sprint�s stock price is currently around 70% below the price T-Mobile is offering to pay for its shares. If investors thought the deal was likely, they�d be buying Sprint�s shares in the hope of making money from selling to T-Mobile. The fact they�re not taking advantage of that �arbitrage� suggests they think the deal will fall through. They�ll know soon enough: all that�s left is for the judge to make his decision.