AT&T to DOJ: Merger Won't Change Competitive Landscape
AT&T (NYS: T) has filed a response to the Department of Justice's Aug. 31 complaint seeking to block the company's proposed $39 billion acquisition of T-Mobile USA. In the filing, AT&T claims that the Justice Department fails to acknowledge the efficiencies that will result from the deal and doesn't accurately depict the amount of competition that exists in the wireless industry.
AT&T said that wireless competition remains fierce -- prices are declining, innovation is occurring, and new providers are entering the business. Specifically, the company pointed to competitors such as established providers Verizon (NYS: VZ) and Sprint Nextel (NYS: S) , as well as companies such as MetroPCS (NAS: PCS) and Leap Wireless (NAS: LEAP) , which it called "upstarts." It also acknowledged regional players such as U.S. Cellular and Cellular South. Those claims echo ones AT&T has publicly made to the FCC over the deal.
AT&T also said that the Justice Department complaint does not explain how T-Mobile, which AT&T says has lost subscribers despite being in a robustly growing market, provides any unique competitive threat against AT&T. "Although the transaction will remove T-Mobile as an independent competitor, no significant consumer harm will result," AT&T said. "For the past two years, T-Mobile has been losing customers, despite growing demand, and without the spectrum to deploy a 4G LTE network."
The company also discounts the Justice Department's claims that T-Mobile is a "challenger brand" that offers disruptive pricing. AT&T instead says that T-Mobile's business model remains "stuck in the middle" between larger providers like Verizon Wireless, AT&T, and Sprint and lower-priced competitors MetroPCS and Cricket.
AT&T also reiterated its prior claims that without the merger, it will continue to experience capacity constraints, and millions of customers will be deprived of faster and higher-quality service.
In a statement that accompanied the filing, AT&T said it is seeking an expedited hearing on the matter and that it remains open to finding a solution to the DOJ's problems with the T-Mobile merger.
The company and the DOJ are scheduled to present their case to U.S. District Court Judge Ellen Huvelle during a hearing on Sept. 21. Sprint filed its own lawsuit against the deal, and Huvelle is also expected to be hear that case.
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