AT&T Calls T-Mobile Deal Good for Public

AT&T Inc. (T) said its proposed $39 billion acquisition of T-Mobile USA Inc. is good for mobile- phone customers and that the U.S. lawsuit seeking to block the deal “fails to come to grips” with its benefits.

AT&T filed its response today to the U.S. Justice Department’s complaint in federal court in Washington. The company said the merger would lead to better service, fewer dropped calls and lower prices for consumers. AT&T cited fierce competition from Verizon Communications Inc. (VZ), Sprint Nextel Corp. (S), MetroPCS Communications Inc., Leap Wireless International Inc., U.S. Cellular Corp. and Cellular South Inc.

“The Department does not and cannot explain how, in the face of all these aggressive rivals, the combined AT&T/T-Mobile will have any ability or incentive to restrict output, raise prices, or slow innovation,” AT&T said in the filing.

AT&T described T-Mobile as “the only major carrier to have actually lost subscribers in a robustly growing market” with a business model that has it trapped between large providers and lower-priced competitors.

The Justice Department sued Dallas-based AT&T and Bonn- based Deutsche Telekom AG (DTE)’s T-Mobile unit on Aug. 31, saying a combination of the two companies, which would make AT&T the biggest U.S. wireless carrier, would “substantially” reduce competition.

‘Interested’ in Solution

Mike Balmoris, an AT&T spokesman in Washington, said in an e-mail that the company remains “interested in a solution that addresses the DOJ’s issues with the T-Mobile merger.”

The company said in the filing that the government’s characterization of AT&T, T-Mobile, Verizon and Sprint as the “big four” is misleading because the Federal Communications Commission recently reported that 90 percent of U.S. consumers have at least five wireless providers to choose from.

AT&T also added new lawyers to the case. Mark Hansen of Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC in Washington filed today as lead counsel. Hansen, who has previously represented AT&T, Verizon, General Electric Co. and Morgan Stanley, declined to comment on the filing or his status as lead counsel.

Hernan Daguerre, a T-Mobile spokesman, declined to comment on the filing.

“This transaction as currently proposed is anticompetitive and harmful to consumers,” Gina Talamona, a spokeswoman for the antitrust division of the Justice Department, said in an interview. “We will respond further in our court filings.”

Sprint, which has filed its own lawsuit opposing the merger, said AT&T’s filing doesn’t change its position on the deal.

‘Could Raise Prices’

“The proposed takeover would create a clear wireless duopoly that could raise prices, stifle innovation and cost American jobs,” Sprint spokesman John Taylor said in an e-mail.

U.S. District Judge Ellen Segal Huvelle has set a hearing for Sept. 21 and told the parties to be prepared to discuss settlement options.

The case is U.S. v. AT&T Inc., 11-cv-01560, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in federal court in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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