Mergers & acquisitions

CTIA 2011: Verizon, Sprint CEOs React to AT&T/T-Mobile Combo

ORLANDO, Fla. -- International CTIA WIRELESS 2011 -- Sprint Corp. (NYSE: S) CEO Dan Hesse and Verizon Wireless CEO Dan Mead have adopted different postures toward AT&T Inc. (NYSE: T)'s proposed acquisition of T-Mobile US Inc. and what it mean for the competition. Sprint's Dan expressed concern and a healthy dose of sarcasm, while Verizon's Dan just seemed indifferent. (See AT&T to Buy T-Mobile USA for $39B.)

At least that's how they acted when put in the hot seat. CTIA capped off Tuesday's keynote circuit with a CEO roundtable featuring Hesse, Mead and AT&T Mobility CEO Ralph de la Vega. (T-Mobile CEO Philipp Humm dropped out last minute.) After getting a number of softball questions out of the way, Jim Cramer, Mad Money's energetic host, asked de la Vega if spectrum was the real reason AT&T is buying up T-Mobile.

He responded with one of AT&T's favorite stats, that data usage has grown 8,000 percent over four years and will grow by another eight to tenfold in the next five years.

"What you saw on Sunday alleviates the spectrum exhaust AT&T and T-Mobile face in several cities, by allowing the networks to be combined" and utilizing both companies' spectrum to create a denser grid, he said.

Hesse, meanwhile, completely ignored the topic of its competitors' proposed merger during his solo keynote address, but when asked, didn't shy away from expressing his apprehension. When asked for his take, he quipped, "My opinion doesn't matter. I think the FCC and DoJ will have something to say about that." [Ed. Note: Federal Communications Commission (FCC) Chairman Julius Genachowski spoke before the panel, but led off by noting he had no comment on the issue -- yet.] (See What Happens to Sprint After AT&T/T-Mobile Merger? and AT&T/T-Mobile: Riddled With Regulatory Risk.)

"In my view, I am concerned about it," Hesse later elaborated, adding that AT&T and Verizon already have 67 percent market share between them and that will rise to 79 percent if the deal closes. "I do have concerns it would stifle innovation to the hands of just two," he said, eliciting applause from the packed house.

When Cramer asked all three point blank about their reactions to a The New York Times headline suggesting there was little cheer for consumers in the deal, Hesse said he agreed; de la Vega reiterated the reasons he believes it's false; and Mead remained coy, noting that the headline was an overstatement.

Mead described Verizon as an "observer," and said he's confident in the breadth of spectrum it owns. There may be things on a market-by-market basis that are of interest to Verizon (i.e. concessions AT&T may have to make), but "we won't be distracted by this," he said.

Further, when asked if Verizon thought about buying T-Mobile before AT&T did, he replied: "We didn't think through that. We didn't think there was a need."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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