AT&T: "Merger is in best interests of the country"

Faith Merino · August 31, 2011 · Short URL:

After the DOJ sued to block the AT&T/T-Mobile merger, AT&T countered the charges

Shortly after the Department of Justice filed a complaint to block the merger of AT&T and T-Mobile, AT&T has responded that it will fight the measure and request an expedited hearing.

“The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court,” said AT&T EVP and General Council Wayne Watts in a statement.

The Justice Department argued Wednesday that the $39 billion deal would substantially decrease competition among mobile wireless telecommunication providers, and would result in “higher prices, poorer quality services, fewer choices and fewer innovative products.” 

AT&T, the second largest carrier in the U.S. next to Verizon, is seeking to acquire T-Mobile, the fourth largest carrier in the U.S., in a deal that would give it an 80% market share, according to Sprint, which argues that the merger would create a duopoly.  Currently, the four major carriers—Verizon, AT&T, Sprint, and T-Mobile—account for 90% of the wireless market in the U.S., so a merger between AT&T and T-Mobile would launch AT&T ahead of Verizon and easily shunt Sprint right out of the game.

Quashing the competition by forming a super-carrier would “result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole, in a statement.   “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers.   This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

AT&T is countering that claim and highlighting some of the major benefits that the deal would provide not just consumers, but the U.S. economy as a whole, by:

1)     Solving the nation’s data exhaustion problem

2)     Allowing AT&T to roll out 4G LTE mobile broadband to another 55 million Americans, or 97% of the population

3)     Creating tens of thousands of jobs

Indeed, in an attempt to sweeten the deal, AT&T promised to bring back 5,000 call center jobs to the U.S. if the merger is approved.  

In a touchingly patriotic statement, AT&T CEO Randall Stephenson said: “At a time when many Americans are struggling and our economy faces significant challenges, we’re pleased that the T-Mobile merger allows us to bring 5,000 jobs back to the United States and significantly increase our investment here.  This merger and today’s commitment are good for our employees, our customers and our country.”

Hmm…scary wireless duopoly, or a drop in the unemployment bucket?...

It’s not looking good for AT&T, though.  If the deal is rejected, as many analysts believe it will be, AT&T could be looking at a hefty $7 billion loss—a $3 billion breakup fee, plus another $4 billion to Deutsche Telekom to provide T-Mobile with wireless spectrum and reduced call charges for calls into the AT&T network. 

As of this writing, AT&T stock has fallen 4.69% to $28.23.

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