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 »
STAFF PICKS
When It Comes to Mining Asteroids, Technology Is Only the First Problem
2 days ago
WHY WE CARE

Foreign Policy takes a look at the future of mining the estimated "100,000 near-Earth objects—including asteroids and comets—in the neighborhood of our planet. Some of these NEOs, as they’re called, are small. Others are substantial and potentially packed full of water and various important minerals, such as nickel, cobalt, and iron. One day, advocates believe, those objects will be tapped by variations on the equipment used in the coal mines of Kentucky or in the diamond mines of Africa. And for immense gain: According to industry experts, the contents of a single asteroid could be worth trillions of dollars." But the technology to get us there is only the first step. Experts say "a multinational body might emerge" to manage rights to NEOs, as well as a body of law, including an international court.

Source:
STAFF PICKS
Obama Reflects on His Economic Record
2 days ago
WHY WE CARE

Not to be outdone by Jeffrey Goldberg's recent piece in The Atlantic about President Obama's foreign policy, the New York Times Magazine checks in with a longread on the president's economic legacy. In it, Obama is cognizant that the economic reality--73 straight months of growth--isn't matched by public perceptions. Some of that, he says, is due to a constant drumbeat from the right that "that denies any progress." But he also accepts some blame himself. “I mean, the truth of the matter is that if we had been able to more effectively communicate all the steps we had taken to the swing voter,” he said, “then we might have maintained a majority in the House or the Senate.”

Source:
STAFF PICKS
Reagan Families, Allies Lash Out at Will Ferrell
2 days ago
WHY WE CARE

Ronald Reagan's children and political allies took to the media and Twitter this week to chide funnyman Will Ferrell for his plans to play a dementia-addled Reagan in his second term in a new comedy entitled Reagan. In an open letter, Reagan's daughter Patti Davis tells Ferrell, who's also a producer on the movie, “Perhaps for your comedy you would like to visit some dementia facilities. I have—I didn’t find anything comedic there, and my hope would be that if you’re a decent human being, you wouldn’t either.” Michael Reagan, the president's son, tweeted, "What an Outrag....Alzheimers is not joke...It kills..You should be ashamed all of you." And former Rep. Joe Walsh called it an example of "Hollywood taking a shot at conservatives again."

Source:
PEAK CONFIDENCE
Clinton No Longer Running Primary Ads
2 days ago
WHY WE CARE

In a sign that she’s ready to put a longer-than-ex­pec­ted primary battle be­hind her, former Sec­ret­ary of State Hil­lary Clin­ton (D) is no longer go­ing on the air in up­com­ing primary states. “Team Clin­ton hasn’t spent a single cent in … Cali­for­nia, In­di­ana, Ken­tucky, Ore­gon and West Vir­gin­ia, while” Sen. Bernie Sanders’ (I-VT) “cam­paign has spent a little more than $1 mil­lion in those same states.” Meanwhile, Sen. Jeff Merkley (D-OR), Sanders’ "lone back­er in the Sen­ate, said the can­did­ate should end his pres­id­en­tial cam­paign if he’s los­ing to Hil­lary Clin­ton after the primary sea­son con­cludes in June, break­ing sharply with the can­did­ate who is vow­ing to take his in­sur­gent bid to the party con­ven­tion in Phil­adelphia.”

Source:
CITIZENS UNITED PT. 2?
Movie Based on ‘Clinton Cash’ to Debut at Cannes
2 days ago
WHY WE CARE

The team behind the bestselling "Clinton Cash"—author Peter Schweizer and Breitbart's Stephen Bannon—is turning the book into a movie that will have its U.S. premiere just before the Democratic National Convention this summer. The film will get its global debut "next month in Cannes, France, during the Cannes Film Festival. (The movie is not a part of the festival, but will be shown at a screening arranged for distributors)." Bloomberg has a trailer up, pointing out that it's "less Ken Burns than Jerry Bruckheimer, featuring blood-drenched money, radical madrassas, and ominous footage of the Clintons."

Source:
×