Sprint's Hesse: DOJ lawsuit against AT&T/T-Mobile won't prevent consolidation

Sprint Nextel (NYSE:S) CEO Dan Hesse said that the Department of Justice's lawsuit to block AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA--which Sprint has joined--won't necessarily prevent future industry consolidation.


Speaking at the Goldman Sachs Communacopia Conference, Hesse said any potential T-Mobile buyer will need to demonstrate that the benefits of removing T-Mobile from the market will outweigh the downsides. And while Hesse said he was not indicating that Sprint would pursue a merger with T-Mobile should the deal fall through, he said "you could make a very, very strong argument" that combining two value wireless players would give the combined company the scale to compete better with AT&T and Verizon Wireless (NYSE:VZ).

In response to Hesse's comments, Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, said that Sprint "has spoken disingenuously about their motives for opposing" the deal. "Now, Mr. Hesse's public musings have made their motives much more clear," he said in a statement. "That they would act in their own economic interest is not surprising. That they would expect the United States government to be a willing partner certainly is."

The Sprint chief said he would not comment on the 4G network strategies the company plans to discuss at an Oct. 7 investor conference in New York, but did set the stage for what the company might talk about. Hesse said Sprint might lay out a concrete technical plan for how to do network hosting arrangements via its Network Vision architecture, which is centered around new, multi-mode base stations that can support LTE. He also said Sprint will likely discuss whether it will provide additional financial assistance to Clearwire (NASDAQ:CLWR), which sells mobile WiMAX service to Sprint and in which Sprint holds a 54 percent stake. Clearwire has said it can deploy a TD-LTE network overlay if it can secure an additional $600 million in financing.

And Hesse obliquely touched on reports that Sprint will launch Apple's (NASDAQ:AAPL) iPhone 5 next month. Without confirming anything, Hesse said Sprint's financial guidance might have to be updated if is fourth-quarter handset lineup changed. "Theoretically, if we were to secure such a device, we may have to adjust guidance accordingly for that," he said. 

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