Cellular South jumps into fray, sues to block AT&T/T-Mobile

Cellular South sued to block AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA, becoming the latest legal combatant to cross swords with AT&T over the deal.

The privately held regional wireless carrier--the nation's ninth-largest by subscribers--said that it filed its complaint with the U.S. District Court in Washington and that the suit is related to the Department of Justice's lawsuit to block the deal on antitrust grounds as well as Sprint Nextel's (NYSE:S) lawsuit against the deal.

Indeed, Cellular South's complaint rests on the same legal arguments as Sprint's lawsuit, arguing the deal violates Section 7 of the Clayton Antitrust Act. Section 7 of the law prohibits mergers and acquisitions either "where the effect of such acquisition may be to substantially lessen competition" or where the deal restrains "such commerce in any section or community, or tend to create a monopoly of any line of commerce." Sprint issued a statement in support of Cellular South's lawsuit.

"AT&T's proposed takeover of T-Mobile would profoundly impact the interests of the wireless industry as a whole," Eric Graham, Cellular South's vice president for strategic and government relations, said in a statement. "If AT&T were to complete this deal, not only would it substantially lessen competition, but it would essentially consolidate the market into the hands of the ‘Big Two--AT&T and Verizon."

Cellular South said that if the deal were to go through, regional carriers will not be able to obtain the latest wireless devices "in a timely fashion and at a reasonable cost," that it and other regional players "will be forced to pay higher roaming prices--assuming that they are able to obtain roaming agreements at all," and that consumers will faces higher prices and less choice and innovation.

AT&T spokesman Michael Balmoris declined to comment on Cellular South's lawsuit and instead pointed to the company's statement after Sprint's lawsuit was filed. AT&T said that "Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers" and that the deal will help solve the nation's spectrum crunch and improve service, allow AT&T to expand LTE to 97 percent of all Americans, and result in billions of dollars of investment and thousands of jobs.

The flurry of activity comes just ahead of a Sept. 21 court date, in which the Justice Department and AT&T are expected to discuss the prospects for a settlement.

For more:
- see this release
- see this filing (PDF)

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