Verizon And Sprint On The AT&T/T-Mobile Deal - InformationWeek

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3/23/2011
02:01 AM
Ed Hansberry
Ed Hansberry
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Verizon And Sprint On The AT&T/T-Mobile Deal

The CEO's of Verizon and Sprint have both come forward with public statements on the news that AT&T is buying T-Mobile. Some of it is as you'd suspect, but some of the comments may surprise you.

The CEO's of Verizon and Sprint have both come forward with public statements on the news that AT&T is buying T-Mobile. Some of it is as you'd suspect, but some of the comments may surprise you.In my opinion Sprint has the most to lose from this deal. With the current market share of the carriers, Sprint, T-Mobile, Verizon and AT&T get to call themselves the big four. Once T-Mobile is gone though and AT&T has over 40% share and Verizon over 30% share, they will likely be called the big two. Someone with 16% or so of share in a market of three will be considered a pretender.

Dan Hesse is the CEO of Sprint Nextel Corp. Hesse said "I do have concerns that it would stifle innovation and too much power would be in the hands of two," according to report in Forbes.

In that same report, Barclays Capital analyst James Ratcliffe said that Sprint would be left "somewhat out in the cold."

Surprisingly, at least to me, Verizon Wireless CEO Daniel Mead said he wouldn't do anything to block the AT&T acquisition of T-Mobile. Acquisitions can be very distracting to management. It is rare you have an acquisition of such large magnitude that it goes smoothly enough that both entities come together well while at the same time you don't let your competition take advantage of the extra complexities you are dealing with. More often than not it seems integrations go ary throwing the company into turmoil while the competition cleans your clock.

Therefore, Verizon isn't eyeing Sprint according to Verizon CEO Daniel Mead. "We're not interested in Sprint. We don't need them." They want to stay focused on being the most profitable operator in the US according to Reuters, even though they will now be in the number two slot.

Mr. Mead could just be playing his cards close to the chest. I find it hard to believe they will have nothing bad to say about the deal when the FTC and FCC come looking for information from Verizon on the competitive landscape of the US cellular industry. We'll have to see what transpires as the deal moves forward.

This, of course, assumes the deal closes. That is still a big if. No one is expecting this to be easy.

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