Sprint, AT&T ratchet up war of words over T-Mobile deal

Sprint Nextel (NYSE:S) CEO Dan Hesse said AT&T's (NYSE:T) proposed purchase of T-Mobile USA for $39 billion will harm innovation and the wireless industry as a whole. 

Sprint CEO Dan HesseThe Sprint chief, who has been one of the most vocal opponents of the proposed deal since it was announced in late March, said that the entire wireless ecosystem could be threatened by the deal. "If AT&T is allowed to swallow T-Mobile, competition will be stifled, growth will be stifled and wireless innovation will be jeopardized," Hesse said Friday in an appearance that supposed to be about Sprint's green efforts held at the Commonwealth Club in San Francisco. Sprint unveiled a new eco-friendly phone, the Samsung Replenish, and said 82 percent of the device can be recycled.

Hesse used the appearance to sharpen many of the lines of attack that Sprint has been formulating against the deal, which it has formally opposed and will lobby against. He said that the combined AT&T and T-Mobile could wield significant power over handset suppliers. "Whoever the supplier is, you can say, ‘Hey, I'll take all of your production,'" Hesse said. "They could restrict our access to some of the cool devices."

The FCC last week formally began laying the groundwork to review the deal, which must be also be approved by the Department of Justice. Congress also is expected to hold hearings on the deal later this year, and Hesse said he will testify. Hesse seemed confident that Sprint will not be the only company to publicly oppose the deal. "I think there will be a number of companies that will oppose it, but clearly there will be companies that will be concerned about opposing it because of the ramifications for their business," he said.

AT&T, meanwhile, fired back with a formal response to Hesse's comments, arguing that Hesse is being hypocritical. In a statement, Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs, said that before the merger announcement Hesse had characterized the industry as competitive. According to Cicconi, Hesse in February said that mergers and acquisitions could lead to growth in the industry.

"It is self-serving for them to argue that the highly competitive wireless market they cited only months ago is now threatened by the very type of transaction they seemed prepared to defend previously," Cicconi said in the statement.

For more:
- see this Reuters article
- see this AllThingsD article
- see this NYT blog post
- see this AT&T blog post

Related Articles:
FCC sets wheels in motion to review AT&T/T-Mobile deal 
FCC's Copps pushes back against AT&T/T-Mobile deal
AT&T's Stephenson: T-Mobile deal likely will require divestitures
State attorneys general take aim at AT&T/T-Mobile deal
Sprint announces plan to attack AT&T/T-Mobile deal
Sprint to lobby Congress against AT&T/T-Mobile deal
Metered billing, AT&T/T-Mobile hot topics during CTIA carrier keynote

Suggested Articles

T-Mobile's announcements last week will disrupt the industry but also show how nervous it is about closing the Sprint merger.

The operators signed a letter of intent to team up on the construction and operation of up to 6,000 new cell sites in Germany.

Arkansas is the latest state to say it supports the DoJ's settlement that approves the merger between T-Mobile and Sprint.