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Sprint Joins the War Against the AT&T, T-Mobile Merger

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Last week, the US Department of Justice echoed the sentiments of the rest of the country and came out against the AT&T, T-Mobile merger. The bureau filed a complaint in federal court, attempting to block the acquisition from taking place.

And now, a national competitor has done the same.

Sprint has filed a lawsuit in federal court to stop this unholy union. Like the Justice Dept, the carrier believes the merger would significantly diminish competition within the industry, harming "retail consumers and corporate customers by causing higher prices and less innovation."

Of course, it has its own interests in mind as well. Sprint goes on to say that the merger would further "entrench the duopoly of AT&T and Verizon" -- giving them three-quarters of the wireless market and a whopping 90% of the profits.

So, while Sprint may be acting in its own best interest, few smartphone users would disagree with its position.

You can read the company's press release here:

Sprint Files Suit to Block Proposed AT&T and T-Mobile Transaction

WASHINGTON (BUSINESS WIRE), September 06, 2011 – Sprint Nextel [NYSE:S] today brought suit against AT&T, Inc., AT&T Mobility, Deutsche Telekom and T-Mobile seeking to block the proposed acquisition as a violation of Section 7 of the Clayton Act. The lawsuit was filed in federal court in the District of Columbia as a related case to the Department of Justice's (DOJ) suit against the proposed acquisition.

"Sprint opposes AT&T's proposed takeover of T-Mobile," said Susan Z. Haller, vice president-Litigation, Sprint. "With today's legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal."

Sprint's lawsuit focuses on the competitive and consumer harms which would result from a takeover of T-Mobile by AT&T. The proposed takeover would:
  • Harm retail consumers and corporate customers by causing higher prices and less innovation.
  • Entrench the duopoly control of AT&T and Verizon, the two "Ma Bell" descendants, of the almost one-quarter of a trillion dollar wireless market. As a result of the transaction, AT&T and Verizon would control more than three-quarters of that market and 90 percent of the profits.
  • Harm Sprint and the other independent wireless carriers. If the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability to use its control over backhaul, roaming and spectrum, and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition.
(See also: Even the Dept. of Justice Hates the Idea of an AT&T, T-Mobile Merger and iPhone Shipment Estimates Down 10%, Report Says)

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POSITION:  No positions in stocks mentioned.