CTIA-Sprint cries foul over rivals' mega-merger

ORLANDO, Florida Tue Mar 22, 2011 6:00pm EDT

Dan Hesse, Chief Executive Officer of Sprint Nextel, speaks during the CEO Roundtable at the International CTIA wireless industry conference at the Orange County Convention Center in Orlando, Florida March 22, 2011. U.S. wireless operators will have to pay higher subsidies for cellphones as they come with more features, according to Hesse. REUTERS/Scott A. Miller

Dan Hesse, Chief Executive Officer of Sprint Nextel, speaks during the CEO Roundtable at the International CTIA wireless industry conference at the Orange County Convention Center in Orlando, Florida March 22, 2011. U.S. wireless operators will have to pay higher subsidies for cellphones as they come with more features, according to Hesse.

Credit: Reuters/Scott A. Miller

Related Topics

ORLANDO, Florida (Reuters) - Sprint Nextel Corp (S.N) cried foul over a planned merger between AT&T Inc (T.N) and T-Mobile USA, saying the deal would stifle competition and hurt its profitability.

While Sprint has not yet officially opposed AT&T's $39 billion acquisition of Deutsche Telekom's (DTEGn.DE) U.S. unit, executives attending a wireless industry event on Monday criticized its likely impact.

"When one competitor has that much buying power they can determine the fate of different products," Farib Adib, a Sprint executive in charge of handsets, said on the sidelines of the CTIA conference in Orlando, Florida.

Sprint already faces tough competition from both AT&T and Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L).

Verizon has joined AT&T in carrying Apple Inc's (AAPL.O) iPhone. Hesse declined to comment on whether subsidies required for the iPhone would be too high for Sprint to offer the popular device.

The top telecom companies are also in a race to offer customers fast wireless Internet connections, and the heavy capital spending required puts the bigger players at an advantage.

Sprint had 58,000 net subscriber additions in its most recent quarter, while Verizon Wireless had 872,000 additions in the fourth quarter and AT&T had 400,000.

Steve Elfman, Sprint's president for network operations, said the size of a combined AT&T and T-Mobile would be a threat in more ways than one.

"They could get better pricing from suppliers than we could and we could be at a disadvantage," he said.

A bigger AT&T could also become more aggressive in marking down its prices, again putting Sprint at a disadvantage.

"If we have to go down in pricing it will affect our profitability. It could also drive pricing up," he said.

Chief Executive Dan Hesse also complained that U.S. wireless operators will have to pay higher subsidies for cellphones as they come with more features.

"Subsidies are going to increase as devices get more powerful," Hesse said during a chief executive panel at the same conference.

As device makers add features such as higher-speed Web links and more powerful cameras, Hesse said, "there's going to be more cost to us."

He promised to introduce a new high-speed phone at the show.

(Reporting by Sinead Carew and Barbara Liston; Editing by Derek Caney and Richard Chang)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (6)
Cru wrote:
So then… $40/kb? Great.

Mar 22, 2011 2:39pm EDT  --  Report as abuse
WilliamJay wrote:
Ladies and gentlemen cover your butts her come the price increases.

Can you say Oligopoly.

Mar 22, 2011 3:59pm EDT  --  Report as abuse
SpectreWriter wrote:
What a crock! The technology itself (hardware) may cost a bit more, but that will be passed on to the consumer, as it already is. Let’s face it, when you pay them $200-$300 for the smartphone, you’re paying what it cost them for the device. How do I know? For starters, refurbs are $100 cheaper, but more to the point, when those devices get to the Prepaid market as new phones, they cost $200. No carrier is paying supplement on a device without a contract. Moreover, when I was living in Africa, no contracts, the phone that was $400 in the States was $100 there — and the retailer was still making a profit.

They build skyscrapers and pay their execs millions by getting us to believe all that BS. Truth is, on a month to month basis, the data connection is a HUGE moneymaker for them. The only reason we get better speed/technology is because they have to one-up each other to keep and gain customers. If AT&T had their way and could figure out how to charge for it, we’d still be using a couple tin cans and string.

Mar 22, 2011 7:41pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.