March 22, 2011 / 5:35 PM / 6 years ago

CTIA-Sprint cries foul over rivals' mega-merger

3 Min Read

<p>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.Scott A. Miller</p>

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

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