By Aaron Pressman
October 16, 2017

Sprint and T-Mobile are expected to announce a merger agreement any day now, but the stock market reaction has been unusual. Typically, when a company becomes the subject of merger rumors, its stock price jumps as investors anticipate a buyer will pay at least some premium to take control.

But with T-Mobile and its majority owner Deutsche Telekom expected to win control of Sprint, there’s been no price bump. In fact, since Sprint’s stock price closed at $8.52 back on September 22, shortly after CNBC broke the story of renewed merger talks, it has fallen about 16% to trade at $7.16 in morning trading on Monday.

Do investors think the merger is a bad idea?

Not at all. Combining T-Mobile, the third-largest wireless carrier, and Sprint, the fourth-largest carrier, should create substantial opportunities for greater profits. Not only will the combined carrier reach about the same customer base as larger rivals Verizon (vz) and AT&T (t), but reducing the number of competitors in the market to three from four should also reduce competitive pressure that led to a fierce price war over the past year. Analysts estimate the combined carrier could dramatically increase its profit margin by combining the two wireless networks, as well. Annual savings could reach $3.5 billion, or 25% of Sprint’s operating expenses, UBS analyst John Hodulik calculated recently. If everything went according to plan in a best case scenario, Sprint’s shares should be worth $13, Hodulik said.

So do investors think regulators may reject the merger?

That’s part of the concern. Attempts to combine wireless carriers and reduce the market to just three major competitors have twice been stopped in the past. The Justice Department under President Obama blocked AT&T from buying T-Mobile (tmus) in 2011 and signaled similar opposition was likely when Sprint’s (s) majority owner, SoftBank CEO Masayoshi Son, expressed an interest in T-Mobile in 2014.

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But the Trump administration was supposed to be different, given its hostility to regulation and early reliance on former Bush administration officials who had been easier on mergers. Trump ended up appointing Makan Delrahim, a former corporate lawyer who lobbied for AT&T, to head the antitrust division and most analysts still seemed to think a deal would be approved. Then last week Bloomberg reported that staff attorneys in the Justice Department’s antitrust office have not changed their past opposition. The leak worried some analysts. Deutsche Bank telecom analyst Matthew Niknam cut his price target on Sprint to $7 from $8, citing the report.

What else could be worrying investors?

Sprint’s stock price run up from around $6 before the election to more than $9 in the months after Trump won was based on optimism that Sprint would take control of T-Mobile, as Masayoshi Son had proposed back in 2014. But as analysts dug into Sprint’s finances, they started to question whether T-Mobile and Deutsche Telekom would agree to a deal at that valuation. And as the early talks went nowhere, Sprint started looking for other merger partners, like cable companies Charter Communications (chtr) and Comcast (cmcsa), which are just getting into the wireless business. Analysts took that as a sign that T-Mobile was not eager to cede control or merge at Sprint’s high valuation. The cable talks went nowhere, however, and lately rumors have emerged that T-Mobile, not Sprint, will be in control after the combination.

Will there end up being a premium for Sprint shareholders?

Ultimately, with all the questions swirling around the rumored deal, Sprint investors may be concerned that they won’t be getting paid a premium. The two carriers could combine and leave Sprint shareholders, including SoftBank, with a minority stake that’s at least initially worth less the $35 billion or so that Sprint was worth at its height earlier this year. The biggest recent single day sell-off in Sprint shares happened on September 25 after a report that Deutsche Telekom was pressing for a deal that valued Sprint below its stock market value. So likely the most important factor weighing on investors, and Sprint’s share price, is the concern that the merger will happen but without any bounty for current shareholders.

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