Opposition
forces to AT&T's proposed acquisition of T-Mobile USA received
a major supporter yesterday: Sprint Nextel.
Sprint
first commented on the blockbuster deal -- which would consolidate 80 percent
of the country's wireless customers in just two companies -- in a moderate
tone after the merger was initially announced. "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," Sprint said in a statement a little more
than a week ago.
But the
rhetoric became more heated yesterday, when Sprint put out a press release announcing its official opposition to
the AT&T/T-Mobile deal.
"The
transaction ... would reverse nearly three decades of actions by the U.S.
government and the courts that modernized and opened U.S. communications
markets to competition," the statement said. "The wireless
industry has sparked unprecedented levels of competition, innovation, job
creation and investment for the American economy, all of which could be undone
by this transaction."
Sprint
went on to detail how the merger would result in a company "almost three
times the size of Sprint," resulting in a de facto "duopoly" of
the wireless industry by AT&T and Verizon.
"Sprint
urges the United States government to block this anti-competitive
acquisition," Vonya McCann, senior vice president of government affairs
for Sprint, said in the release. "On behalf of our customers, our industry
and our country, Sprint will fight this attempt by AT&T to undo the
progress of the past 25 years and create a new Ma Bell duopoly."
According to Reuters,
a number of consumer and trade groups have also been critical of the deal.
"This requires smaller competitors to negotiate agreements with these two
telecom giants," Consumers Union told Reuters, while the
public interest group Free Press called the deal a "train wreck."
The
$39-billion AT&T/T-Mobile merger faces approval by the Department of
Justice and the Federal Communications Commission and could take a year to
pass. Analysts are predicting regulators to impose a number of conditions.
Sprint was not happy about this either. "This transaction is
fundamentally anti-competitive, and you can't fix that with merger
conditions," Charles McKee, Sprint's vice president of government affairs,
told Reuters.
AT&T's
argument is that there are five or more competitors in 18 of the top 20
wireless markets, meaning the merger would not be a threat to competition.
But Sprint is lobbying regulators to review the merger on a national
level, rather than the market-by-market approach that the DOJ typically takes
when assessing competitiveness in mergers.
The
private equity firm Robert W. Baird & Co. raised expectations for AT&T
stock to "outperform," saying it was confident the merger will be
approved. Expectations for Leap Wireless and MetroPCS were also raised to
"outperform" because the merger would put pressure on Verizon or
Sprint to acquire smaller regional wireless carriers.
