Sprint's Home-State Attorney General Blasts AT&T Deal

Kansas Attorney General Derek Schmidt, the top lawyer in Sprint Nextel Corp.'s (S) home state, filed objections to AT&T Inc.'s (T) proposed $39 billion takeover of Deutsche Telekom AG's (DTEGY, DTE.XE) T-Mobile USA. In a Nov. 21 letter to the Federal Communications Commission, Schmidt said the merger would "deal a blow to competition" and wouldn't facilitate expanded broadband coverage to rural areas, as AT&T has said. AT&T would have been forced to expand high-speed fourth-generation coverage because of Verizon Wireless' own efforts to build out a new network, Schmidt said. "AT&T has chosen to pay a premium to take an innovative competitor out of the market," said Schmidt, a Republican, in the letter. "More concentration is this area will only harm competition, reduce choice, raise prices, and thus harm the consumers we are charged with protecting." AT&T's merger hit an obstacle in August when the Justice Department sued to block it, citing antitrust concerns and the possibility that prices could rise. FCC Chairman Julius Genachowski said at the time that the merger raises "serious concerns." Further, the FCC will seek an administrative hearing on the merger proposal, likely at the conclusion of the Justice Department's suit, a person close to the matter said today. The hearing, before an administrative law judge, would present another obstacle for AT&T as well as an uncertain timeframe for completing the deal. Overland Park, Kan.-based Sprint has been a vocal opponent of the merger, filing its own suit and sending Chief Executive Dan Hesse to testify before Congress. Seven attorneys general have also filed suit against the deal and it is still facing a review by the Public Utilities Commission in California. "It is not unusual for state attorneys general to participate in merger review proceedings," said Brad Burns, an AT&T spokesman, noting that AT&T had received support for the deal from several top state attorneys, as well as other federal and local officials. A Sprint spokeswoman, Leigh Horner, said the carrier had held discussions with Schmidt and other attorneys general and was "pleased to see another expressing concern." The deal would catapult AT&T over Verizon Wireless as the largest U.S. wireless carrier by subscribers. Spokespeople from T-Mobile and the Kansas attorney general's office weren't immediately available for comment.