COMPTEL, a trade association representing companies that compete with incumbent telephone providers like AT&T and Verizon Communications, on Tuesday announced its opposition to AT&T’s $39 billion acquisition of T-Mobile USA.
The merger will produce “devastating economic consequences," resulting in higher prices, fewer choices for consumers and less incentive to innovate, COMPTEL CEO Jerry James said in a statement.
“This proposed consolidation represents a clear and present danger to competition and a recovering economy," he added. “There is no question that it should be rejected."
AT&T appeared to brush off COMPTEL's comments.
"With apologies to any company we may have overlooked, it appears that the overwhelming majority of COMPTEL's roughly 100 members don't compete in the wireless market," AT&T spokesman Michael Balmoris said. "And the association's only significant wireless competitor has already voiced its opposition, so no surprise there."
Sprint Nextel is a member of COMPTEL and last month announced its formal opposition to a merger that it said would create a company three times the size of itself based on wireless revenues.
The Federal Communications Commission and U.S. Department of Justice must approve the merger, and some states are also expected to closely scrutinize the deal with an eye on the merger’s impact on competition.
COMPTEL’s James also asserted the merger would result in job losses.
“The most immediate impact of the proposed merger is the impending loss of jobs as AT&T will not doubt build on its legacy of terminating tens of thousands of employees in its pursuit of market dominance," he added. “One only need to look at statements AT&T made in 2006, noting that upon closing the BellSouth acquisition the company would shed 10,000 jobs."
AT&T has said it expects the merger to produce “synergies" in excess of $39 billion. Some, including the Wall Street Journal, speculate that could mean thousands of job cuts for a company that employs 267,000 people.
The merger would narrow the pool of the largest national wireless providers from four to three and make AT&T the largest U.S. mobile operator, surpassing Verizon Wireless and furthering distancing itself from Sprint Nextel, the third largest operator.
AT&T Chief Executive Randall Stephenson recently told the Journal that the “industry is intensely competitive now, and will be intensely competitive after the deal."
For example, AT&T has said that there are five or more wireless providers in 18 of the top 20 U.S. local markets. But AT&T would control a big slice of the pie, and power would be largely concentrated in the hands of two companies.
AT&T and Verizon Wireless would control nearly 80 percent of wireless subscribers nationwide, according to the New York Attorney General’s office.
AT&T (95.5 million) and T-Mobile (33.7 million) served more than 129 million wireless customers at the end of 2010. Verizon Wireless listed 94.1 million customers at the end of the year.
The United States was home to 302.9 million wireless subscriber connections at the end of last year, according to CTIA, the wireless association.
