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Sprint’s Hess Slams AT&T/T-Mobile ‘Duopoly’

April 16, 2011

The chief executive of Sprint Nextel Corp criticized rival AT&T Inc’s proposed $39 billion acquisition of T-Mobile USA on Friday, contending that a combination of the two companies would hurt innovation and set back the US wireless industry.

Dan Hesse, the CEO of No. 3 US mobile operator Sprint Nextel, lashed out against the deal, which is now going through a round of regulatory scrutiny.

Speaking at the Commonwealth Club in San Francisco, Hesse said a duopoly consisting of a combined AT&T/T-Mobile and No. 1 U.S. wireless carrier Verizon would result in fewer options for consumers and a cutoff on ideas that drive the wireless market.

“If AT&T is allowed to swallow T-Mobile, competition will be stifled, growth will be stifled and wireless innovation will be jeopardized,” Hesse told Reuters at the club.

If the deal was to go through, about 80 percent of US wireless contract customers would be concentrated between just two carriers — AT&T/T-Mobile and Verizon Wireless.

AT&T says the merger would actually bring about innovation and economic growth by improving quality and expanding service to 95 percent of population.

Hesse would not confirm reports that Sprint was also in talks to acquire T-Mobile prior to that company accepting AT&T’s bid. “If Sprint and T-Mobile had been talking, we would still be the third-largest [carrier] and not No. 2,” he said.

Hesse was concerned that AT&T and Verizon could get such a large portion of the market that Sprint could find itself shut out from future advancements in mobile phones for its network. “The buying power of the two largest companies could be such that it would restrict our access to certain new products,” Hesse said.

Regulatory approval for AT&T’s buyout of T-Mobile USA could take a year or longer. When asked his thoughts about the chance of halting the deal, Hesse said: “It’s hard to handicap. It’s primarily up to the Justice Department.”

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