AT&T faces growing pressure over $39B T-Mobile deal

AT&T (NYSE:T) is facing mounting pressure against its proposed $39 billion acquisition of T-Mobile USA, although the company contends it is not seeing anything more than it expected in terms of opposition.

According to a report in the Wall Street Journal, which cited unnamed sources familiar with the matter, antitrust regulators at the Department of Justice have raised serious initial concerns about the deal and are worried it could harm competition. The department has refused to comment on the status of its investigation.

Last week Leap Wireless (NASDAQ:LEAP) formally joined the brigade of companies and public interest groups allied against the deal. Leap is the largest wireless carrier to oppose the deal after Sprint Nextel (NYSE:S), which is leading the charge. Additionally, lawmakers from both parties at the second congressional hearing on the deal last week expressed skepticism about the merger.

"Opposition is not growing," Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs, told the Journal. "If anything, it seems fairly confined to the usual people and the usual organizations and does not seem to be growing beyond that."

Lawyers representing Sprint met with FCC Commissioner Michael Copps and his chief of staff on May 25 to express the company's concerns over the deal and to urge the commission to examine what impact the deal will have on the national wireless market. The lawyers also urged the FCC to consider the merger in conjunction with AT&T's proposal to purchase Qualcomm (NASDAQ:QCOM) MediaFLO spectrum for $1.93 billion.

Additionally, on Friday the FCC sent AT&T a formal request for data on its proposed purchase of T-Mobile, its first such request. The 78-page request includes 50 detailed questions, including evidence of why AT&T needs to acquire T-Mobile's spectrum to expand LTE service to 97 percent of Americans. The FCC also asked questions about what impact the deal will have on jobs, whether AT&T will continue using the T-Mobile brand and whether AT&T will continue offering T-Mobile's pricing plans post-merger.

For more:
- see this WSJ article (sub. req.)
- see this Sprint filing
- see this FCC document (PDF)
- see this Bloomberg article
- see this WSJ article (sub. req.)

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