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Urges U.S. government "to block this anti-competitive acquisition"

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.

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RE: what?
By amanojaku on 3/29/2011 10:30:14 AM , Rating: 5
I think retrospooty was pointing out how the government does so many stupid things that nothing should be a surprise any more.

Anyway, Sprint buying T-Mobile would have been more acceptable since the combined market share would have been less than AT&T or Verizon.

In millions of customers:

T-Mobile USA - 33.73
Sprint Nextel - 49.9
Sprint + T-Mobile - 83.63
Verizon Wireless - 94.1
AT&T - 95.5
AT&T + T-Mobile - 129.23

Actually, subtract one from AT&T-Mobile and add one to Sprint Nextel. That's me.

RE: what?
By SirKronan on 3/29/2011 10:59:36 AM , Rating: 3
I ran out of votes before I got to your post, but QFT!!!!! You are right on the money.

Not only the numbers matter, either, but also the fact that the AT&T and T-Mobile merger would make AT&T the ONLY GSM provider in this country, which will virtually eliminate all GSM competition minus a few select Verizon world-compatible handsets.

In addition, just as the article says, this will simply make a more modern day version of the company the government had to break apart years ago. I know that all companies are just in it for the money, but AT&T is one of the most "evil" companies by nature that I have ever dealt with, and that has been for years (and thankfully not as a customer, just on the retail front).

RE: what?
By Aikouka on 3/29/2011 12:46:35 PM , Rating: 2
But what would have happened if Sprint bought T-Mobile? Would they have kept T-Mobile as GSM when Sprint uses CDMA? If not, then all T-Mobile customers would have been converted to Sprint customers and put on a CDMA network. With that, you'd still end up with only one GSM provider (AT&T).

RE: what?
By WalksTheWalk on 3/29/2011 3:36:57 PM , Rating: 2
This falls along the same lines with Oracle acquiring Sun as a generally bad idea. We need more competition not less. We'll end up with three carriers which will have a loose fix on prices.

Recent examples are: ISPs, RAM, LCD displays, etc.

RE: what?
By retrospooty on 3/29/2011 4:00:19 PM , Rating: 3
"I think retrospooty was pointing out how the government does so many stupid things that nothing should be a surprise any more."

Exactly... Its not the Dems or the Reps, or independents for that matter. Its freegin all of them.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997
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