WASHINGTON (Reuters) - Sprint Nextel urged regulators to block AT&T Inc’s $39 billion bid to buy Deutsche Telekom AG’s T-Mobile USA, saying the merger would harm consumers.
“This transaction is fundamentally anti-competitive, and you can’t fix that with merger conditions,” Charles McKee, Sprint’s vice president of government affairs, federal and state regulatory, told Reuters in a phone interview on Monday.
Sprint, the No. 3 U.S. mobile carrier, already faces tough competition from industry leaders AT&T and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc. Combined, AT&T and T-Mobile USA, the No. 4 U.S. operator, would leapfrog Verizon Wireless as the top carrier.
The deal would concentrate 80 percent of U.S. wireless contract customers in just two companies — AT&T/T-Mobile and Verizon Wireless.
No. 2 U.S. mobile carrier AT&T, often criticized for dropped calls and slow connection speeds, said the merger would spur innovation and economic growth by improving quality and expanding service to 95 percent of the U.S. population.
The U.S. Federal Communications Commission — which aims to extend mobile broadband to virtually all Americans — and Justice Department are expected to take at least a year to review the proposed merger, and impose significant conditions if they approve the deal.
“The U.S. wireless market is intensely competitive with five or more competitors in 18 of the top 20 markets,” AT&T said in a statement on Monday.
The Justice Department typically takes a market-by-market look when assessing competitiveness in such mergers. But Sprint will push for a review on a national basis.
“Customers want to use their phones wherever they go,” McKee said, adding that Verizon, AT&T, T-Mobile and Sprint are the only nationwide carriers.
Consumer and antitrust groups have also been critical of AT&T’s proposed transaction.
Consumers Union argued that smaller, regional carriers rely on AT&T and Verizon to give their customers services such as data roaming. “This requires smaller competitors to negotiate agreements with these two telecom giants,” the group said.
The public interest group Free Press called the merger “a train wreck” that would mean consumers would pay more.
Still, Robert W. Baird on Monday raised AT&T to “outperform,” saying it is confident the proposed merger will be approved.
The brokerage also raised Leap Wireless International Inc and MetroPCS Communications Inc to “outperform” as the deal could spur Verizon or Sprint to pursue acquisitions of MetroPCS, Leap Wireless or US Cellular Corp.
On the New York Stock Exchange, AT&T closed up 1.8 percent, Sprint rose 2.1 percent, and Verizon advanced 1.2 percent. Leap finished 2.2 percent higher on Nasdaq and MetroPCS rose 1.6 percent on the NYSE.
Reporting by Jasmin Melvin; Additional reporting by Diane Bartz; Editing by Richard Chang