AT&T Sued by Cellular South Over Planned Purchase of T-Mobile

AT&T Inc. (T) was sued by Cellular South Inc., the ninth-largest wireless carrier by customers, in an effort to block its acquisition of T-Mobile Inc. based on claims their combined market power violates U.S. antitrust laws.

Cellular South, in a complaint filed yesterday in federal court in Washington, said the merger “threatens to substantially lessen competition” and cause it significant losses and damages.

“The merger of AT&T and T-Mobile is anticompetitive, and will result in consumers facing higher prices, less innovation, fewer choices and reduced competition,” Cellular South said in its complaint.

Its lawsuit challenging the proposed $39 billion merger between AT&T and T-Mobile comes after seven U.S. states on Sept. 16 joined the Justice Department’s lawsuit seeking to block the transaction. Sprint Nextel Corp. (S), the market’s No. 3 player, filed its own antitrust lawsuit challenging the merger a week after the Justice Department’s Aug. 31 complaint.

“As this growing chorus of opposition shows, this proposed transaction violates antitrust law and is not in the best interests of consumers and the American economy,” Vonya McCann, Sprint’s senior vice president of government affairs, said yesterday in an e-mailed statement.

‘Protecting Itself’

Mike Balmoris, an AT&T spokesman, declined to comment beyond what the company said when Sprint filed its lawsuit Sept. 6. “Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers,” AT&T said at the time.

AT&T has said it will fight the lawsuits in court at the same time as it explores settlement options with the Justice Department. AT&T has said the transaction will improve wireless service and increase investments and jobs.

The merger would make Dallas-based AT&T the largest U.S. wireless operator, ahead of Verizon Wireless, and would cement the dominance of the “Big Two” over regional carriers, Cellular South said in its complaint. The company, a unit of Ridgeland, Mississippi-based-Telapex Inc., said it “will find it harder to secure both wireless devices at competitive prices and times and nationwide roaming.”

Cellular South included T-Mobile’s parent, Deutsche Telekom AG (DTE), and AT&T Mobility LLC as defendants in the complaint.

Closely held Telapex also owns Delta Telephone Co., Franklin Telephone Co. and Telepak Networks Inc.

The case is Cellular South Inc. v. AT&T Inc., 11-cv-01690, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net

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

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