YOU ARE AT:CarriersAnalyst says Sprint Nextel moves could inadvertently aid AT&T

Analyst says Sprint Nextel moves could inadvertently aid AT&T

Taking a cue from Sprint Nextel Corp. (S) , comments are starting to pour into the Federal Communications Commission about whether the agency should allow AT&T Mobility (T) to buy T-Mobile USA Inc. (DTEGY) To date, most parties are commenting as one would expect, with small wireless operators protesting the tie-up and AT&T lobbying that the proposal will be good for consumers.
Interestingly, the comments provide a backdrop to continued speculation that Sprint Nextel is considering network-sharing with LightSquared, a move that one analyst says could have Sprint Nextel inadvertently making regulators more comfortable with the proposed merger.
AT&T filed paperwork with the FCC yesterday officially asking to transfer licenses from T-Mobile USA to the nation’s second-largest wireless operator. The carrier noted that the combined company would be better able to address spectrum scarcity, aid its LTE rollout and bring more jobs to the nation. Further, AT&T says T-Mobile isn’t that strong of a competitor. “The absence of T-Mobile USA from the marketplace will not have a significant competitive impact. In fact, as an independent competitor, T-Mobile USA would face serious challenges. It has been losing market share the last two years, is confronting spectrum exhaust in certain markets with no ready means to acquire significant additional spectrum in the near term, and lacks a clear path to LTE. At the same time, Deutsche Telekom must devote significant capital to its core business in Europe. It was because of this difficult path that DT decided to look for new strategic options.”
The Rural Telecommunications Group Inc. said no conditions placed on a combined AT&T/T-Mobile would be sufficient to balance out harms from the proposed merger. The lobbying group, which represents carriers with fewer than 100,000 subscribers, cited roaming costs and job loss as two reasons to deny the merger. “Rural consumers will be especially harmed because they have historically received lower pricing on roaming services from T-Mobile when they travel to urban areas,” RTG said. “AT&T’s charges to other carriers to allow those carriers’ customers to roam on AT&T are significantly higher than the charges levied by T-Mobile for the same roaming services.”
Further, an estimated 37,000 jobs at T-Mobile are at risk of being eliminated with the merger, the trade group noted.
Comments from the Rural Cellular Association followed the same thought process. “This is a seminal moment for the concept of wireless competition,” said Steven K. Berry, president and CEO of RCA. “This will mean higher prices and fewer choices for consumers, job losses in the industry, and for many smaller GSM carriers it could mean extinction. This clearly moves to a monopoly if you are a GSM provider.”
Meanwhile, Medley Global Advisors L.L.C. analyst Jeffrey Silva noted that Sprint Nextel’s recent agreement with Clearwire Corp., and speculation of a deal with LightSquared, could impact the AT&T/T-Mobile proposed deal. “While securing merger clearance from the DoJ (Department of Justice) and the FCC represents a very heavy lift on its face, we believe any and all moves by Sprint to strengthen its position as the No. 3 national wireless carrier could improve the comfort level of policymakers in considering the proposed union between the No. 2 and No. 4 wireless operators. Therein lies a potential paradox for Sprint as government antitrust lawyers and federal telecom regulators begin to delve into their comprehensive reviews of the horizontal transaction.”

ABOUT AUTHOR

Tracy Ford
Tracy Ford
Former Associate Publisher and Executive Editor, RCR Wireless NewsCurrently HetNet Forum Director703-535-7459 [email protected] Ford has spent more than two decades covering the rapidly changing wireless industry, tracking its changes as it grew from a voice-centric marketplace to the dynamic data-intensive industry it is today. She started her technology journalism career at RCR Wireless News, and has held a number of titles there, including associate publisher and executive editor. She is a winner of the American Society of Business Publication Editors Silver Award, for both trade show and government coverage. A graduate of the Minnesota State University-Moorhead, Ford holds a B.S. degree in Mass Communications with an emphasis on public relations.