The $39 billion acquisition would combine the two of largest wireless carriers in the U.S., something Sprint says “would entrench AT&T’s and Verizon’s duopoly control over the wireless market.” AT&T is trying to fix major flaws in its network, while T-Mobile is hemorrhaging customers and needs an exit strategy.
The acquisition, if approved, would result in a company with more than 125 million subscribers, besting Verizon’s more than 93 million and dwarfing Sprint Nextel’s more than 49 million customer base. Before it can go through, though, it has to secure approval from the Department of Justice and the Federal Communications Commissions. And since it’s a high-profile deal, it’s also likely to face scrutiny from Congress.
The First Shots Are Fired
That’s where Sprint comes in. It had some harsh words for AT&T in its announcement, claiming that the deal would create an anticompetitive duopoly:
“If approved, the proposed acquisition would create a combined company that would be almost three times the size of Sprint in terms of wireless revenue and would entrench AT&T’s and Verizon’s duopoly control over the wireless market. The wireless industry moving forward would be dominated overwhelmingly by two vertically integrated companies with unprecedented control over the U.S. 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. “AT&T didn’t take long to fire back, though:
“With regard to Sprint’s recent statements about our transaction, we have always found that the most constructive course is to focus on our own strategies for serving our customers and building our business, rather than becoming distracted by challenging the business strategies of others,” SVP Jim Cicconi said in response.
While Sprint may be ready for a fight, AT&T spends six times more on lobbying than Sprint, and the number two wireless carrier has been ramping up its antitrust operation in order to win government officials over, according to WSJ. If AT&T gets its way and the deal is decided based on the competitiveness of the nation’s 20 local markets rather than from a national perspective, then the deal is likely to secure government approval.
Still, Sprint isn’t about to let AT&T absorb T-Mobile without a fight:
“So 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,” Sprint SVP Vonya McCann stated in the company’s announcement.
Those are fighting words, and you can bet that this battle will only get more brutal as Congressional hearings loom.http://mashable.com/2011/03/28/sprint-att-t-mobile/
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