Sprint Piles In (T, DTEGY, S, VZ, VOD, LEAP, PCS)
Not even a week after the US Department of Justice filed a complaint to block the proposed $39 billion merger of AT&T (NYSE: T) and the T-Mobile USA division of Deutsche Telekom AG (OTC: DTEGY), Sprint Nextel Corp. (NYSE: S) has filed its own lawsuit to stop the merger. One can only wonder when Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD), or Leap Wireless International Inc. (NASDAQ: LEAP) or MetroPCS Communications Inc. (NYSE: PCS) plan to join the fray.
Sprint’s filing looks like nothing so much as a precautionary move in the event that the government and AT&T come to some settlement of the Justice Department’s lawsuit. Sprint’s lawsuit could at least disrupt any anticipated smooth sailing that AT&T might expect from such a settlement.
The latest lawsuit was filed as a “related case” to the DoJ’s lawsuit, according the announcement from Sprint. The nation’s third-largest wireless carrier says the proposed merger would harm retail and corporate customers by raising prices and stalling innovation. In addition, the merger would allow AT&T and Verizon to control 75% of the woreless market and 90% of the profits in that market. Sprint also nots that the market power of AT&T/T-Mobile would give the company so much control over a number of services that it would serve to damage competitors’ businesses and “ultimately to damage competition.”
Without comparing the DoJ’s suit word-for-word with Sprint’s, it’s tough to find much difference between summaries of the two lawsuits. Sprint does say that it expects to “contribute our expertise and resources” to proving that the proposed merger is illegal.
An interesting thought on that is that if Sprint is contributing resources to the fight against the merger, perhaps the company is hoping that it can put a little steel in the DoJ’s spine in the event that the government appears willing to settle.
And if that settlement comes about anyway, Sprint can still fight the merger, or at least toss a little sand in the gears. The technical term for this is the ‘belt-and-suspenders’ approach.
Sprint’s shares are down about -2.5% in mid-afternoon trading, at $3.45, after posting a new 52-week low of $3.44. The 52-week high is $5.35. AT&T’s shares are down about -0.9%, at $27.81, barely within the 52-week range of $27.14-$31.94.