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“The merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies"

The rumors persisted for months -- years, even. We reported on them as recently as March 8: "Report: Sprint in Talks to Acquire T-Mobile USA". Then, over the weekend, all previous speculations and ruminations were put to rest when it was announced that AT&T -- not Sprint -- was the most handsome suitor for the Magenta carrier 

Right about now, Sprint must be feeling like the nerdy boy who's been mustering the courage to ask out his crush -- a cheerleader, naturally, despite the pair's evident incompatibility -- only to learn that the object of his affection had been courted by the backup quarterback of the varsity football team over the weekend.

So what's Sprint going to do about it? Well, in this case, it means issuing a statement urging the Department of Justice (DOJ) and the FCC to consider the competition.

An AT&T/T-Mobile merger "would alter dramatically the structure of the communications industry,” Sprint said in a statement cited on Ina Fried's Mobilized blog. “AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor.

“If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80% of the US wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete,” Sprint said. “The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.”

AT&T told Mobilized that it wasn't worried about getting approval. “Today when you look across the top 20 markets in the country, 18 of those markets have five or more competitors, and when you look across the entire country, the majority of the country’s markets have five or more competitors,” AT&T President and mobile unit CEO Ralph De La Vega told Mobilized. “I think if the criteria that has been used in the past is used against this merger, I think the appropriate authorities will find there will still be plenty of competition left."

In Washington, Sen. Jay Rockefeller (D-W.Va) promised to look into the merger with his Commerce Committee while urging regulators to "leave no stone unturned" in their scrutiny of the merger. “With every passing day, wireless services are becoming more and more important to the way we communicate,” he said in a statement. “So it is absolutely essential that both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.”

If the deal fails, AT&T could be stuck with a $3-billion debt to T-Mobile. It could also be forced to hand over spectrum and other considerations, according to Mobilized

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Regulators dropped the ball
By Da W on 3/21/2011 9:25:45 AM , Rating: 2
I used to work at the canadian competition autority. I can tell you that except for Europe, praticaly NO merger was ever countered for the past 2 decades and the north american economy has greatly suffered because of that.

When you think of it, WHY would AT&T want to buy T-Mobile at a 20% premium over current market value? WHY? Only because it will mean less competition, and proportionally more market power for AT&T. There's is no other reason behind it, it's definitly not a simple "value" deal like Warren Buffet would do.

Here in Canada we gave the okay for Rogers to swalow then fierce small and nibble competitor Fido. Then we gave the okay for Bell to eat Virgin Mobile. I know Telus rents Bell towers. And we even let pass a joint venture between Rogers and Bell so they can co-own their 3G technology (HSPA). The end result is that you can shop anywhere, you will find ONE price in canada, and it's 50 bucks for 100minutes and 500MB or 65$ for 200min and 1GB. You will choose your carrier by the phone you wish to have, which are more or less all 1Ghz qualcomm snapdragon with a 800X640 Amoled screen and a 5MPx camera...

RE: Regulators dropped the ball
By DanNeely on 3/21/2011 11:10:16 AM , Rating: 2
Most buyout's are done for above market value because the buyer thinks they're getting a good deal/it's worth more to them than the current owners, so I don't think you can use the fact to support your conclusion however right it is.

RE: Regulators dropped the ball
By Da W on 3/21/2011 3:21:07 PM , Rating: 2
Yes, but in this case who are making the bid? Only other carriers, because, as you say, the deal is worth more to them than the current owners. Where do this increased value come from, if not increased market power? This is not a case of a conglemerate buying an undervalued asset like most M&A are.

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