What happened

Shares of Sprint (NYSE:S) fell 12% in December, according to data from S&P Global Market Intelligence, following a December 6 report from CNBC indicating T-Mobile (NASDAQ:TMUS) is considering reducing the price of what began last year as a $26.5 billion merger agreement between the two telecom leaders. Sprint shareholders are also grappling with an ongoing lawsuit brought by a group of state attorneys, meant to prevent the deal from coming to fruition.

So what

Of course, it's concerning enough that shareholders might need to give up some of the juicy merger premium. But while the merger was technically approved by Federal regulators late last year, arguably the greater concern for the third- and fourth-largest telecoms in the country is the prospect of the combination being scrapped altogether.

Black chess pieces on left and wooden pieces on right with half-black, half-wooden piece in center.

Image source: Getty Images.

Now what

In a filing Wednesday, the states suing to stop the merger argued that the federal government performed "what appears to be only a cursory examination of the approval conditions."

But T-Mobile COO Mike Sievert remains confident, telling investors at an event Tuesday, "We know we have the right case," adding that their legal teams have done "a phenomenal job" defending the merger's merits in court.

In any case, it remains to be seen which side prevails. But given uncertainty surrounding the trial combined with T-Mobile's reported interest in lowering the cost of the merger, it's no surprise that Sprint stock has fallen so hard.