US mobile operator Sprint Nextel has filed a lawsuit asking the court to block AT&T’s US$39bn acquisition of T-Mobile USA. Observers commented that the lawsuit was an additional distraction for the proposed merger, but said its implications should not…
US mobile operator Sprint Nextel has filed a lawsuit asking the court to block AT&T’s US$39bn acquisition of T-Mobile USA.
Observers commented that the lawsuit was an additional distraction for the proposed merger, but said its implications should not be overestimated.
The lawsuit was filed in the federal court for the district of Colombia, the same court where the Department of Justice filed its separate lawsuit against the AT&T/T-Mobile deal last week.
Sprint said in a statement that the lawsuit is focussed on “the competitive and consumer harms” emanating from the deal.
The company argued the deal would cause higher prices and less innovation. It would also “entrench the duopoly control” of AT&T and Verizon Wireless. These two companies are currently the largest two mobile operators in the US in terms of subscribers. The deal would harm Sprint and other independent wireless carriers, the company said.
AT&T said in a first reaction to the lawsuit that it would contest the matter in court.
Two US lawyers suggested in emails to TelecomFinance that Sprint’s lawsuit did not represent a significant additional threat to the AT&T/T-Mobile deal.
One lawyer said that the lawsuit was not helpful and would be a distraction, but that it was not a major problem. He said that third parties, especially competitors, have a hard time meeting their burden of proof in cases like this.
A banker dismissed the Sprint lawsuit as “not newsworthy”.
Robin Bienenstock, an analyst at Sanford C.Bernstein, said that Sprint was piling pressure on in order to add hurdles to the deal.
“If anything it suggests that Sprint isn’t completely sure the deal is dead which is interesting, but our house view is that the deal is all but dead,” she said.
