US number three telco Sprint Nextel has said that the proposed acquisition of T-Mobile USA by AT&T would “reduce competition and harm consumers”. The telco issued a statement yesterday after more than a week of speculation over how it will react to the…
US number three telco Sprint Nextel has said that the proposed acquisition of T-Mobile USA by AT&T would “reduce competition and harm consumers”.
The telco issued a statement yesterday after more than a week of speculation over how it will react to the acquisition.
It said in its statement that the transaction would reverse almost thirty years of action by the US government and regulatory authorities to ensure competition in the market.
It also argued that if the deal is approved, the market will be dominated by two vertically-integrated companies with “unprecedented control” over the wireless post-paid market and key inputs to it, including the backhaul and access that rival companies needed to compete.
Sprint’s senior VP for government affairs, Vonya McCann, urged the government to block the acquisition and said that Sprint would fight to stop it going through.
She said: “This transaction will harm consumers and harm competition at a time when this country can least afford it.”
AT&T’s announcement of the transaction came after earlier reports that Sprint and T-Mobile USA were in talks over a merger.
If the acquisition is approved, Sprint will be competing against the virtual duopoly of AT&T and Verizon Wireless.
Sprint, which operates iDEN and CDMA technology, currently has 49.9 million subscribers.
The combined AT&T and T-Mobile would have over 129 million subscribers. The number two carrier in this scenario would be Verizon Wireless, which currently has 93.2 million customers (although it also claims to have 7.9 million “other connections” with consumers).
Immediately after the AT&T announcement, there was speculation that Verizon Wireless would consider acquiring Sprint, but this was swiftly dismissed by Verizon.
Some commentators foresee a partnership between Sprint and US satellite/terrestrial venture LightSquared, which is rolling out its LTE network in the US.
But this could potentially cause friction between Sprint and Clearwire, the WiMAX wholesaler that is in direct competition with LightSquared and in which Sprint holds a 54% stake.
Before the AT&T announcement, Sprint’s CEO Dan Hesse was reported to say that every option for Sprint’s future involved Clearwire.
