The CEO of AT&T, Randall Stephenson, expects the company will have to divest some spectrum and customers in order to get approval for its US$39bn acquisition of T-Mobile USA. According to Dow Jones, Stephenson has dismissed the idea that this…
The CEO of AT&T, Randall Stephenson, expects the company will have to divest some spectrum and customers in order to get approval for its US$39bn acquisition of T-Mobile USA.
According to Dow Jones, Stephenson has dismissed the idea that this acquisition will be bad for competition in the US.
He reportedly said that the industry is intensely competitive now and will still be intensely competitive after the deal.
In response to the news earlier in the week that the New York Attorney General was reviewing the deal, Stephenson said that the review was expected and that the company is looking at other states that could start a review of the deal.
Stephenson also reportedly said that he did not believe it was necessary for regulators to impose any price controls as a concession for the deal. He suggested this was not relevant, as despite consolidation in the industry in recent years, prices have come down.
AT&T’s confidence that the deal is going to be approved is demonstrated by the break-up fee it has agreed with Deutsche Telekom, the owner of T-Mobile USA.
If the acquisition of T-Mobile USA falls through, AT&T will have to pay a fee of US$3bn to T-Mobile, as well as transfer some AWS spectrum and provide a roaming agreement between the two companies.
Separately, more groups are voicing their opposition to the deal.
The political adviser at US public interest group Free Press told TelecomFinance yesterday that AT&T has to appear confident that this deal will be approved.
But he added that the deal would not offer real choice for consumers.
Joel Kelsey said: “You [will] only have the spectre of consumer choice. You don’t have real consumer choice.”
Kelsey suggested that AT&T and Verizon Wireless would exert such dominance over the market that other carriers would effectively be barred from growing.
He said that rural or regional carriers would have to seek roaming agreements with AT&T or Verizon Wireless in order to expand out of their home areas.
AT&T and Verizon Wireless would also have control of large amounts of attractive spectrum – “beachfront spectrum, and lots of it”, in Kelsey’s words.
AT&T has disputed claims that the deal is anti-competitive.
When it announced the deal on 20 March, it said that the US wireless industry was “one of the most fiercely competitive markets in the world and it will remain so after this deal”.
It pointed to the fact that a large majority of American consumers can choose between five providers.
Despite five major wireless mergers in the period 1999-2009, it claimed that the average price for wireless services had dropped by 50% (factoring in inflation).
