The Empire Fights Back
Sep 21st 2011 7:59PM
Updated Sep 21st 2011 8:00PM
AT&T (NYS: T) is throwing everything but the Death Star at Capitol Hill to push through its proposed merger with T-Mobile. It has armed its horde of 99 (count 'em) battle-hardened trooper/lobbyists with more than $11 million (so far this year), in large part to create legislative animus against the Department of Justice's anti-merger lawsuit.
AT&T's PsyOps (PR) department has also been busy. It's been peppering D.C. with newspaper ads proclaiming that the deal would give our economy tens of thousands more jobs. But the headline of the ad states why it believes Sprint and its present 4G network provider, Clearwire (NAS: CLWR) , don't want the deal to go through:
In case you're wondering why Sprint is trying to kill the AT&T/T-Mobile merger ... it's all about spectrum.
Sprint Nextel (NYS: S) , of course, is definitely trying to kill the deal -- with its own lawsuit, and its own lobbying and media campaigns. But more important for Sprint than spectrum is its very survival. It is now a distant third in the present four-horse race, and it would be in an even more untenable position were the merger to go through.
So Sprint's stated opposition to the deal -- as printed in its own full-page newspaper ad in Washington-area papers -- is that the merger would:
... result in two companies controlling more than 77% of wireless industry revenues. ... This is a bad idea for consumers, competition and our country.
And bad, certainly, for Sprint.
The second company the ad refers to is Verizon (NYS: VZ) , the present No. 1 domestic wireless carrier in numbers of subscribers. Verizon CEO Lowell McAdam is taking a very Yoda-like view of the whole situation, saying: "The AT&T merger with T-Mobile is kind of like gravity. It had to occur."
What would Yoda do?
Well, McAdam's solution would be that if the government really wants to stop the merger, it needs to have a plan to distribute spectrum: "We're going to watch that very closely." For now, he says, Verizon is staying on the sidelines.
Frankly, that seems like the smartest move at this time.
- Add Verizon Communications to My Watchlist.
- Add AT&T to My Watchlist.
- Add Sprint Nextel to My Watchlist.
- Add Clearwire to My Watchlist.
At the time this article was published Fool contributor Dan Radovsky owns shares of AT&T. Motley Fool newsletter services have recommended buying shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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