MetroPCS argues against AT&T/T-Mobile deal, but offers conditions

MetroPCS (NASDAQ:PCS) made official its opposition to AT&T's (NYSE:T) proposed $39 billion purchase of T-Mobile USA, joining the likes of Leap Wireless (NASDAQ:LEAP), Cellular South and Sprint Nextel (NYSE:S) in calling on regulators to squelch the transaction. MetroPCS, the nation's fifth largest wireless carrier with close to 9 million subscribers, had not previously taken a stance on the deal.

However, in its filing with the FCC, MetroPCS attempted to play both sides of the topic, offering suggestions on conditions the agency should place on AT&T if it does approve the transaction. Specifically, MetroPCS urged the commission to require AT&T to divest unused spectrum, provide roaming services to competitors and quit selling exclusive handsets. MetroPCS' stance is noteworthy considering that other players, including Sprint, have said the deal should not be approved under any conditions.

"AT&T's acquisition of T-Mobile, if allowed to proceed without stringent, meaningful conditions, would be devastating for consumers," concluded MetroPCS in a 93-page document it filed jointly with regional carrier Ntelos.

MetroPCS' stance stands in contrast to that of rival Leap. In its filing, Leap said it does not support the transaction under any circumstances. "This transaction would make a bad situation much worse. It would create fundamental, structural problems in the industry that cannot meaningfully be mitigated through conditions," Leap wrote.

Executives from both MetroPCS and Leap last month said they would consider buying spectrum and other network assets that AT&T might be forced to divest as a condition on its proposed $39 billion acquisition of T-Mobile.

While MetroPCS reserved a few pages for possible conditions on the deal, the bulk of the company's filing offered heated rhetoric aimed at convincing regulators to reject the deal. Among Metro's more prominent arguments:

  • "AT&T's 'spectrum crunch' is a problem entirely of its own making, caused by years of bad decisions and clinging to inefficient technologies."
  • "The fact that MetroPCS already is achieving two times more efficiency than AT&T--with considerably less spectrum--demonstrates that AT&T could double the utilization of its existing spectrum in many markets merely through investments in technology and infrastructure."
  • "MetroPCS was the first to deploy 4G LTE--substantially ahead of AT&T which is only now planning to deploy 4G LTE. AT&T claims spectrum constraints have slowed it down, yet MetroPCS faces much worse constraints, yet has innovated in this area faster than AT&T."

So what's next? The FCC has asked AT&T to respond to a range of questions on the deal. Meanwhile, opponents plan to continue to push their case; the Rural Cellular Association, Comptel and Public Knowledge have scheduled a press conference to discuss the findings of a poll conducted to gauge consumer concern over AT&T's takeover of T-Mobile. Though the groups haven't provided the results of the poll, the results likely won't fall in AT&T's favor.

For more:
- see this MetroPCS FCC filing
- see this Leap Wireless FCC filing

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