In response to a Department of Justice antitrust lawsuit over AT&T’s $39 billion acquisition of T-Mobile USA, the defendants reiterated at least one argument throughout their answer: T-Mobile is weak and doesn’t provide much competition for AT&T.
Although the acquisition would remove Bellevue, Wash.-based T-Mobile – the fourth-largest U.S. mobile operator – as an independent company, the deal won’t significantly hurt consumers, AT&T Inc., T-Mobile USA and its parent Deutsche Telekom AG asserted in an answer filed Sept. 9 with the U.S. District Court for the District of Columbia.
“For the past two years, T-Mobile has been losing customers despite growing demand, and, without the spectrum to deploy a 4G LTE network such as that deployed by the other carriers, there is no reason to expect a change in its undifferentiated competitive significance," AT&T, T-Mobile and Deutsche Telekom asserted in the answer through their attorneys. “To the contrary, T-Mobile’s business model remains ‘stuck in the middle’ between larger providers like Verizon, AT&T, and Sprint, and lower-priced competitors like MetroPCS and Cricket."
The defendants also noted that T-Mobile’s owner, Germany-based Deutsche Telecom, previously revealed it wouldn’t “continue to make significant investments in the United States."
Lawyers at the Department of Justice disagree with AT&T’s argument that T-Mobile isn’t a serious competitor. AT&T and T-Mobile USA, Deputy Assistant General James Cole said recently, compete in 97 of the largest 100 cellular marketing areas. Those markets include more than half of the U.S. population, according to the lawsuit the DOJ filed against AT&T.
“As can be seen in the Department’s complaint, AT&T felt competitive pressure from T-Mobile," Cole said.
But AT&T implied in its answer that is simply not true. “Defendants further respond that currently, T-Mobile is not a unique or material competitive constraint on AT&T."