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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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