Leap Wireless (NASDAQ:LEAP) formally joined the brigade of companies and public interest groups allied against AT&T's (NYSE:T) proposed $39 billion purchase of T-Mobile USA. Leap is the largest wireless carrier to oppose the deal after Sprint Nextel (NYSE:S), which is leading the charge.
The announcement comes two days before a second congressional hearing on the deal, which AT&T executives have been busy defending. Leap, which sells wireless service through its Cricket subsidiary, articulated many of the points Sprint and others have made in opposing the deal. In a statement, the company said the deal, if approved by regulators, will harm consumers and reduce competition, innovation and investment in the industry. Additionally, Leap said the deal will lead to AT&T and Verizon Wireless (NYSE:VZ) controlling the vast majority of wireless revenues and customers.
"At the end of the day, we need to innovate and have access to capital resources to do that and if you have that much concentration in cash flow, we won't be able to do those things," Leap CEO Doug Hutcheson told the Washington Post. Hutcheson said Leap has been asked by the Department of Justice to participate in the department's antitrust review, and will file comments with the FCC and meet with FCC commissioners to express its opposition to the deal.
In an interview with FierceWireless, Russ Merbeth, Leap's vice president of government affairs, said the company has not yet had any conversations with other carriers opposed to the deal, but is open to coordinating with them. He also said Hutcheson is willing to testify before Congress about the deal if he is called to do so.
Leap's position is notable considering the company could stand to gain through the acquisition of divestitures AT&T could be forced to make. Indeed, Leap CFO Walter Berger said as much during an investor conference last week.
Other companies besides Sprint have opposed the deal, including Cellular South. MetroPCS (NASDAQ:PCS) CFO Braxton Carter said last week at an investor conference that his company is worried about the spectrum position AT&T would attain if regulators at the FCC and Department of Justice approve the deal. However, MetroPCS has not specifically come out against AT&T's proposed purchase of T-Mobile.
On Thursday, the House Judiciary Committee's subcommittee on intellectual property, competition and the Internet will hold a hearing on the deal. AT&T CEO Randall Stephenson and Deutsche Telekom CEO Rene Obermann are expected to appear to defend the transaction.
If the deal falls through, AT&T will be on the hook to Deutsche Telekom for $6 billion.
Interestingly, Verizon Wireless has remained relatively quiet on AT&T's proposed purchase of T-Mobile. Verizon recently finished its own blockbuster acquisition of Alltel.
- see this release
- see this Washington Post article
- see this WSJ blog post (sub. req.)
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