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Antitrust

AT&T, Sprint Still Frenemies

If there was any doubt that there is little love lost between AT&T and Sprint, AT&T reminded the world on Wednesday.

AT&T, the nation's second-biggest wireless carrier, called on federal regulators to closely scrutinize Sprint's deal announced earlier in the week to sell a 70 percent stake to Japan's Softbank.

"Softbank's acquisition of Sprint and the control it gains over Clearwire will give one of Japan's largest wireless companies control of significantly more U.S. wireless spectrum than any other company," AT&T Vice President Brad Burns said in a statement released late Wednesday. "We expect that fact and others will be fully explored in the regulatory review process. This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize."

The two companies have often been at odds, most notably last year when Sprint, the nation's third-biggest wireless carrier, led opposition to AT&T's bid to buy its smaller rival T-Mobile USA. The AT&T-T-Mobile deal was derailed late last year after federal regulators came out against the transaction.

So far, most analysts do not see any major regulatory hurdles to the Sprint-Softbank transaction. "We hope the Department of Justice antitrust review will be completed within the initial 30-day Hart-Scott-Rodino waiting period without the need for a second phase investigation," Sprint spokesman John Taylor said, referring to the law governing antitrust reviews of such transactions.

The Federal Communications Commission must also approve the deal, while the federal government's Committee on Foreign Investment in the United States must examine the deal's impact on national security.

"Federal regulators and other government agencies will closely scrutinize the foreign-ownership issue, but it initially appears doubtful it will derail the Softbank/Sprint transaction," Medley Global Advisers Telecom analyst Jeffrey Silva told Tech Daily Dose. "At the same time, I wouldn't be surprised if the foreign ownership becomes somewhat of a flash point during the government's review of the deal."

The investment research firm Stifel Nicolaus also said in a research note on Monday that the deal is "subject to various regulatory approvals, which we do not expect to be significant hurdles to consummation."

The firm said while the deal would strengthen Sprint, it is unlikely to pose a threat to the dominance of AT&T and the nation's biggest wireless provider Verizon Wireless.

The FCC in particular may likely welcome the deal if it helps strengthen Sprint. "The Democratic-led FCC is not only trying to maintain a competitive wireless market as a general policy matter, but appears (through transaction conditions and new rulemakings) to also desire a meaningful counter balance to Verizon and AT&T going forward. That is what the [Obama] administration's scuttling of AT&T-T-Mobile was all about," Silva wrote in a telecom update last week.

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