Rival Sprint threatens 'nukes' to stop AT&T and T-Mobile merger
Jul 1, 2011 8:00 AM, By Michael Grotticelli
Opposition to a proposed $39 billion merger of AT&T and T-Mobile is getting red hot. As critics called on the FCC to hold public field hearings to examine the deal, Sprint’s CEO warned he plans to launch “nukes” in attempt to stop the corporate takeover.
Public Knowledge, Consumers Union, Free Press, Future of Music Coalition, Media Access Project, National Hispanic Media Coalition and the New America Foundation all told the FCC the possible merger is a matter “of great public concern” and field hearings should be held in the next couple of months.
The groups said a merger would result in a more concentrated market with fewer jobs, a fact that AT&T and T-Mobile disputes. The organizations want a series of hearings around the country about the impact of combining two wireless carriers that they argue would control almost 80 percent of the wireless broadband market.
In a separate development, Dan Hesse, Sprint’s CEO, said he plans to launch “nukes” in an effort to stop the deal. In an interview with Bloomberg News, Hesse offered a glimpse into the “white room” where he plans his offensive against AT&T, using the room’s nearly wall-to-wall whiteboards to map out what he called “nukes” in red, blue and green ink.
In addition to Sprint’s resources, Hesse said he has invested his own personal resources in trying to stop AT&T’s merger. He has lobbied Congress, courted technology executives to speak out against the deal and tried to convince state regulators to examine the acquisition. He said he also has “other tactics” up his sleeve.
The deal represents a life-or-death situation for Sprint. Hesse has said the merger would create a duopoly of AT&T and Verizon, and — in that new universe — Sprint would probably be sold and consumers would get the shaft.
“The industry just won’t be as innovative and as dynamic as it has been,” he told Bloomberg. “It’ll gum up the works when everything has to go through these two big tollbooths, one that’s called AT&T and one that’s called Verizon.”
AT&T announced in March that it had reached an agreement to purchase T-Mobile USA from parent company Deutsche Telekom for $39 billion. The deal has quickly come under federal scrutiny, with the U.S. Senate, Department of Justice and Federal Communications Commission all getting involved.
Sprint has filed a formal petition with the FCC objecting to the merger. AT&T responded by claiming the deal would have no effect on the competitive landscape. Hesse spent 23 years at AT&T and ran the company’s wireless business for three years before leaving in 2000. He insists that his opposition to the deal isn’t personal.
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