America’s third-placed carrier Sprint has released a statement officially opposing the proposed $39bn merger of AT&T and T-Mobile. Senior vice president for Sprint’s Government Affairs division, Vonya McCann, said that “Sprint urges the United States government to block this anti-competitive acquisition,” adding that the transaction would “harm consumers and competition at a time when this country can least afford it.”
Sprint said that the proposed deal would reverse almost three decades of activity by the US government and the courts that “modernised and opened US communications markets to competition.” The telco followed up by saying that “unprecedented levels of competition, job creation and investment” could be undone should the transaction be allowed to go ahead.
The proposed deal, which was announced last week, would see AT&T’s market share increase to 43 per cent; with Verizon holding 35 per cent, this would create an effective duopoly in the American wireless market. In its statement, Sprint says that any merger would create a combined company almost three times bigger than it in terms of revenue, “entrenching AT&T’s and Verizon’s duopoly control over the wireless market.” The company added that this would give its rivals unprecedented control over the US wireless post-paid market as well as the availability and price of “key inputs, such as backhaul and access needed by other wireless companies to compete.”
While many observers believe the deal will allow AT&T to cement a leading role for itself in the mobile data market, Informa analysts have suggested that getting approval for the deal may not be an easy ride. Principal Analyst at Informa Telecoms and Media, Mike Roberts, called it “a huge deal that could fundamentally change the structure of the US mobile industry” pointing to the fact that it would represent a significant increase in market concentration. “With the new top players having a combined market share of 74 per cent, up from 63 per cent today, the deal is likely to draw fire from US authorities, including the FCC and potentially the Department of Justice (DoJ),” said Roberts. This view would appear to be underscored by AT&T’s agreeing to a $3bn break clause for Deutsche Telekom should the US authorities scupper the deal, which is expected to take at least a year to complete.
Sprint’s statement concluded with the assertion that it “will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly.”
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With Amazon and Google launching smart home initiatives, have the telcos missed out on their chance to cash in on this market?
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