Sprint Nextel (NYSE:S) formally filed its opposition to AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA, offering a detailed argument to the FCC against the transaction.
Among Sprint's nuggets is a list of the top carriers' spectrum holdings. Click here to enlarge.
Sprint's 377-page filing, a so-called Petition to Deny, comes at the deadline for companies and individuals to file public comments with the FCC on the deal; the FCC has received more than 25,000 individual responses to its request for comment. However, Sprint's filing stands out not only because Sprint is the largest company opposed to the proposed deal but because of the arguments Sprint marshals in its opposition to the merger.
Specifically, Sprint argues that AT&T, in its April 21 filing with the FCC, makes numerous claims worthy of "Alice in Wonderland." For example, Sprint notes that AT&T claims that it doesn't compete with T-Mobile, despite listing T-Mobile as one of the five competitors consumers may choose from in an example of how "fiercely competitive" the market is.
Sprint also argues that AT&T has a reservoir of unused spectrum and that AT&T has failed to adequately invest in its network.
"Even without the proposed transaction, AT&T has the largest licensed spectrum holdings of any wireless carrier," Sprint says in its filing. "AT&T also is the largest holder of unused spectrum, with 40 MHz, on a population-weighted nationwide basis, of unused or underutilized AWS, 700 MHz, and WCS spectrum. AT&T could use this reserve of spectrum to improve service for its customers, but has chosen instead to warehouse it for future services."
(AT&T has argued against the notion that it is warehousing spectrum.)
Further, Sprint argues that AT&T's capacity constraints are due to AT&T's under-investment in its network. "AT&T has lagged significantly in network investment. Its network investment per subscriber has been below the industry average, even after its exclusive iPhone deal placed increased demands on its network," Sprint says in its filing. "Like any other carrier, AT&T can invest in new cell sites and network technologies to maximize efficient use of its spectrum to meet consumer demand for its services. AT&T has made the business decision not to do so. That decision may mean higher dividends for its investors, but it also has resulted in the worst customer satisfaction ratings among all major wireless carriers."
Sprint cites a UBS Investment Research chart showing capital expenditure per subscriber from 2006 to 2010. The chart shows that the industry average excluding AT&T Mobility is $91, and that AT&T's spending comes in at $81.
Sprint also takes umbrage at AT&T's claims that its proposed acquisition of T-Mobile will allow it to bring LTE to an additional 55 million more Americans than AT&T's current LTE plans. Sprint said such claims are "speculative and unrelated to the proposed transaction," and that AT&T has not provided a timeframe for reaching this milestone and has not said how much it will invest to get there. "Instead of paying Deutsche Telekom $39 billion--which DT has said it would use to deploy broadband services in Europe, not the United States--AT&T can invest a fraction of that amount to expand its LTE deployment," Sprint says. "In the absence of the proposed transaction, competition likely will drive AT&T to reach this target anyway."
Not surprisingly, AT&T disputed many of Sprint's arguments, and noted that "dozens of community, civic and minority organizations, 14 governors, multiple labor unions and elected officials" support the merger.
- see this release
- see this Sprint filing (PDF)
- see this AT&T post
- see this AT&T post
- see this Forbes article
- see this National Journal article
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Correction, June 1, 2011: This article incorrectly stated data from the UBS Investment Research chart that was referenced showing capital expenditure per subscriber from 2006 to 2010. The chart shows that the industry average excluding AT&T Mobility is $91, and that AT&T's spending comes in at $81.