Sprint: ATT’s T-Mobile Buy Would Dramatically Alter Market

Published on March 20, 2011
by Ina Fried

In its first comments on AT&T’s proposed $39 billion purchase of T-Mobile USA, Sprint said that the purchase would “dramatically alter” the market and suggested that regulators take a hard look at the deal.

“The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry,” Sprint said in a statement. “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.”

Sprint has itself been seen as a potential merger partner for T-Mobile and has been tapped as one of the companies hardest hit if the deal goes through. The company itself seemed to echo that take in its comments.

“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 by this dramatic change in the structure of the industry.”

A Verizon Wireless representative declined to comment.

AT&T has said it thinks it can win regulatory approval for the deal.

“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 on Sunday. “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.

Meanwhile, at least one person on Capitol Hill is urging scrutiny of the deal. Democratic Senator Jay Rockefeller of West Virginia called on regulators to “leave no stone unturned” in their examination of the proposed 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.”

Rockefeller also promised his Commerce Committee would be looking into the matter.

Should it fail to get approval, AT&T could owe T-Mobile $3 billion in breakup fees and be forced to handover spectrum and other considerations.

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