Head of AT&T Forecasts Doom for Sprint/T-Mobile Merger

The merger hasn’t even been officially proposed yet, but AT&T’s chief is already predicting failure.

A T-Mobile store is seen at 7th Avenue and 49th Street on March 23, 2012 in New York City. T-Mobile USA announced they would be eliminating 1,900 call-center jobs in an effort to cut costs.
National Journal
Laura Ryan
June 17, 2014, 12:11 p.m.

AT&T’s chief thinks a push for a Sprint/T-Mo­bile mer­ger would meet the same fate as AT&T’s own failed bid for the “mo­bile mav­er­ick.”

Even though the mer­ger hasn’t been of­fi­cially pro­posed yet, AT&T Chair­man and CEO Ran­dall Steph­en­son said Tues­day it is a “stretch” to see how it would get reg­u­lat­ors’ nod of ap­prov­al, be­cause it would re­duce com­pet­i­tion in the wire­less in­dustry from four ma­jor car­ri­ers to three.

He’s not just bit­ter about AT&T’s ex­pens­ive break­up with T-Mo­bile after reg­u­lat­ors blocked its $39 bil­lion deal in 2011. Ac­cord­ing to Steph­en­son, reg­u­lat­ors made their reas­ons for block­ing the AT&T/T-Mo­bile in 2011 crys­tal clear: The mer­ger would re­duce com­pet­i­tion.

“There were not oth­er ma­jor is­sues. That was the is­sue, and that’s what they came after,” he said dur­ing an in­ter­view with Dav­id Ruben­stein, CEO of the Carlyle Group, for an event hos­ted by the Busi­ness Roundtable. “As you think about Sprint and T-Mo­bile com­bin­ing, I struggle to see how that is not four go­ing to three.”

T-Mo­bile has ar­gu­ably be­come more of a “mo­bile mav­er­ick” un­der the lead­er­ship of CEO John Legere, who joined the com­pany in 2012. Legere’s ag­gress­ive price-slash­ing strategy has re­ver­ber­ated throughout the wire­less mar­ket.

“[Reg­u­lat­ors] won’t want to see that to go away,” Steph­en­son said.

But AT&T’s chief doesn’t ne­ces­sar­ily think the mer­ger shouldn’t pass.

“Ob­vi­ously, if I thought they should ap­prove ours, it would be hard for me to sug­gest that they shouldn’t ap­prove that one,” he said.

Break­ing up with T-Mo­bile cost AT&T a cool $3 bil­lion in cash and $1 bil­lion in spec­trum, and a failed mer­ger would also cost Sprint a pretty penny. If the Sprint/T-Mo­bile mer­ger fails, Sprint is rumored to have agreed to pay T-Mo­bile at least a $1 bil­lion break­up fee, ac­cord­ing to re­cent re­ports of a tent­at­ive $32 bil­lion mer­ger agree­ment between the third- and fourth-largest mo­bile car­ri­ers.

“It’s a pretty good busi­ness mod­el,” Steph­en­son quipped.

Al­though Sprint sued to block the AT&T/T-Mo­bile mer­ger in 2011 be­cause it would mean “high­er prices and less in­nov­a­tion” for con­sumers, the com­pany and its own­er, the Ja­pan­ese tele­com Soft­bank, are ar­guing that a Sprint/T-Mo­bile mer­ger is dif­fer­ent be­cause it would help the two smal­ler car­ri­ers ac­tu­ally com­pete against Ve­r­i­zon and AT&T.

COR­REC­TION: A pre­vi­ous ver­sion of this art­icle mis­stated the amount that AT&T paid T-Mo­bile after their 2011 mer­ger failed. 

What We're Following See More »
THE QUESTION
How Many Jobs Would Be Lost Under Bernie Sanders’s Single-Payer System?
6 hours ago
THE ANSWER

More than 11 million, according to Manhattan Institute fellow Yevgeniy Feyman, writing in RealClearPolicy.

Source:
WEEKEND DATA DUMP
State to Release 550 More Clinton Emails on Saturday
7 hours ago
THE LATEST

Under pressure from a judge, the State Department will release about 550 of Hillary Clinton’s emails—“roughly 14 percent of the 3,700 remaining Clinton emails—on Saturday, in the middle of the Presidents Day holiday weekend.” All of the emails were supposed to have been released last month. Related: State subpoenaed the Clinton Foundation last year, which brings the total number of current Clinton investigations to four, says the Daily Caller.

Source:
LATER TO THIS YEAR’S NADER
Jim Webb Rules Out Independent Bid
7 hours ago
WHY WE CARE

UPDATED: Sen. Jim Webb (D-VA) will not be playing the role of Ralph Nader in this year’s election. Speaking in Dallas today, Webb said, “We looked at the possibility of an independent candidacy. Theoretically, it could be done, but it is enormously costly and time sensitive, and I don’t see the fundraising trajectory where we could make a realistic run.”

Source:
HE’D SIPHON OFF DEM VOTES
RNC Chief Would Welcome Bloomberg
7 hours ago
THE DETAILS

“The lead­ers of the Re­pub­lic­an and Demo­crat­ic na­tion­al com­mit­tees on Wed­nes­day weighed in on the pro­spect of an in­de­pend­ent pres­id­en­tial run by” former New York City May­or Mi­chael Bloomberg (I). “DNC Chair­wo­man Debbie Wasser­man Schultz sug­ges­ted that the former New York City may­or’s pri­or­it­ies are already ‘well cared-for’ in the Demo­crat­ic plat­form, while RNC lead­er Re­ince Priebus wel­comed the idea, say­ing Bloomberg would si­phon off votes from the Demo­crat­ic can­did­ate.”

Source:
THE QUESTION
How Large Is Hillary Clinton’s Delegate Lead?
8 hours ago
THE ANSWER

Three hundred fifty-two, thanks to superdelegates pledged to Clinton, and the vagaries of the delegate allocation process in early states. Not bad, considering her results have been a virtual tie and a blowout loss.

Source:
×