AT&T/T-Mobile deal to stifle competition and industry growth, says Sprint CEO

A planned multi-billion dollar telecommunications deal that will turn AT&T and T-Mobile into a single giant telco entity is facing its harshest critic from rival player Sprint Nextel Corp.

Dan Hesse, chief operating officer of Sprint Nextel Corp., could not hide his dismay over AT&T’s planned acquisition of T-Mobile USA and lambasted the proposed $39 billion deal, stressing that such move would be tantamount to stifling competition.

“The tie-up between the two would hurt innovation and set the country’s wireless industry back,” Hesse told reporters and industry executives Friday at a gathering in San Francisco.

The proposed AT&T/T-Mobile deal is currently undergoing regulatory review and once firmed-up, is expected to further strengthen AT&T/T-Mobile’s hold of a fast growing telecommunications 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 said.

Meanwhile, James Cicconi, AT&T’s senior executive vice president, external and legislative affairs, pointed out that in recent months Sprint executives had said the wireless industry was very competitive.

“It is self-serving for them to argue that the highly competitive wireless market they cited only months ago is now threatened by the very type of transaction they seemed prepared to defend previously,” said Cicconi in a statement.

The telecoms deal, which was announced in March this year, would have AT&T concentrate 80 percent of U.S. wireless contract customers in just two companies — AT&T/T-Mobile and Verizon Wireless, which is a venture of Verizon Communications and Vodafone Group Plc.

AT&T, currently the No. 2 U.S. mobile carrier, said the merger is expected to spur innovation and economic growth by enhancing quality and expanding reach to about 95 percent of the U.S. population.

The merger is also seen to mean better services for AT&T, which is often being criticized for dropped calls and slow connection speeds.