Leap Says AT&T/T-Mobile Should Be Rejected as Bad for Competition
Leap Wireless/Cricket Tuesday formally opposed AT&T’s buy of T-Mobile. But the merger got key support from Microsoft the same day, the first high tech company to back the deal publicly. Microsoft supports the deal, said Microsoft General Counsel Brad Smith at a Tuesday event at the company’s new office in Washington. “We see it as a step toward building out broadband capability and capacity,” Smith told reporters. Microsoft Windows mobile software runs on at least eight current mobile phone models and the company has device partnerships with both AT&T and T-Mobile, a spokeswoman said.
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Low-cost carrier Leap joined Sprint Nextel, Cellular South and other AT&T competitors in opposing the merger. “The acquisition would harm consumers,” Leap said in a statement. “It would reduce competition and decrease innovation and investment in the wireless industry. It would also accelerate the trend of alarming concentration of wireless providers and would eliminate T-Mobile as a competitive force that helps balance the increasing power of the largest carriers.”
"We wanted to make sure we had a real good grasp of the market dynamics and the relative spectrum positions before we said anything publicly,” Russ Merbeth, Leap vice-president of government affairs, said during an interview Tuesday. The company will submit comments opposing the merger to the FCC by the deadline at the end of this month, he said. Leap is looking closely at the spectrum holdings of a combined AT&T/T-Mobile versus smaller carriers like Leap, Merbeth said. “We're trying to forecast for the future what does that mean,” he said.
Leap Chief Financial Officer Walter Berger indicated at a recent financial conference the company has some interest in any assets AT&T may have to sell off if the deal is approved (CD May 18 p 7). Berger was responding to a question from an analyst, “as opposed to stating necessarily the position of the company with respect to this merger,” Merbeth said. “A company like ours is always looking for opportunities to acquire spectrum."
"We are confident that regulatory approvals will be obtained after a thorough review of the facts and law, because of the significant consumer, public policy and economic benefits resulting from the transaction and because competition will continue to thrive,” an AT&T spokesman said.
Regardless of whether the merger goes through, Sprint remains focused on reducing churn and growing its subscriber base, CFO Joe Euteneuer said during the Barclays conference Tuesday. A Sprint/T-Mobile combination that would have created a “dynamic No. 3” would be better for consumers and competition, he said. The industry would be better off having three players that are relatively the same size, he said. Euteneuer, a former Qwest CFO, also said Sprint is open to opportunities with a wireline player. He didn’t identify specific companies.