AT&T seeks Sprint, Cellular South cases dismissed

Fri Sep 30, 2011 4:26pm EDT

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(Reuters) - AT&T Inc has asked a U.S. judge to dismiss antitrust lawsuits brought by rivals Sprint Nextel Corp and Cellular South, now called C Spire Wireless, to halt AT&T's proposed $39 billion purchase of T-Mobile USA.

The U.S. Justice Department has also sued to block the deal, which would vault AT&T into a leading position in the U.S. wireless market through the purchase of No. 4 operator T-Mobile, a unit of Deutsche Telekom AG.

AT&T, the No. 2 U.S. mobile service, argued in a motion filed on Friday in federal court in Washington that the judge overseeing the case should dismiss the case because Sprint lacked standing to bring the lawsuit, which argued that the deal would hurt competition in the U.S. wireless market.

"Sprint cannot wrap itself in the cloak of wireless service consumers' interest because Sprint is not a consumer but instead a competitor in the sale of wireless services," the filing said.

Sprint, the No. 3 U.S. carrier, has complained that it would be harmed by the mega-combination in obtaining the latest handsets, reaching roaming agreements and accessing the market for backhaul services that carry calls to the wired network.

Sprint said it was not surprised by the filing, which it said was without merit. It said it would respond next Friday.

AT&T has been looking for a way to settle the antitrust case brought by the Obama administration's Justice Department but so far talks have not gone anywhere. Puerto Rico on Friday also joined the lawsuit brought by the government.

AT&T SEEKS DISMISSAL OF SECOND SUIT

AT&T also argued that Cellular South, which changed its name to C Spire Wireless effective earlier this week, did not have a case and used a business proposal made a day after the AT&T and T-Mobile deal was revealed to argue against the smaller company's case.

AT&T included in its filing a copy of an email from C Spire's Chief Executive Hu Meena asking AT&T to alleviate its concerns about the merger by entering a type of network sharing agreement in the state of Mississippi and other areas in the southeast United States.

"This inappropriate proposal confirms that what Cellular South fears is competition, not lack of competition," AT&T said in its filing. It also included another email from Meena disputing AT&T's interpretation of the first email.

A C Spire executive challenged AT&T's characterization of the proposal and said that AT&T had approached the company for support for the deal around the time it was struck.

"AT&T's accusations flatly distort the record. As the emails attached to AT&T's motion make clear, Mr. Meena never suggested that AT&T not compete in Mississippi or anywhere else," Eric Graham, a C Spire vice president, said in a statement. "Mr. Meena raised the same issues that we have articulated for years."

(Reporting by Sinead Carew in New York with additional reporting by Jeremy Pelofsky in Washington, editing by Gerald E. McCormick, Gary Hill)

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