AT&T issued a carefully worded statement yesterday raising objections to Softbank’s $20.1 billion deal to buy a 70 percent stake in Sprint.
The three-sentence statement from AT&T vice president Brad Burns suggested regulators take a close look at the foreign ownership implications of the transaction, as Softbank is a Japanese company and could gain control of a large amount of spectrum through Sprint.
“Softbank’s acquisition of Sprint and the control it gains over Clearwire will give one of Japan’s largest wireless companies control of significantly more U.S. wireless spectrum than any other company. We expect that fact and others will be fully explored in the regulatory review process,” Burns said. “This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize.”
Sprint declined to comment on Burns’ remarks.
There is substantial precedent for foreign ownership of U.S. wireless companies. Verizon Wireless is jointly held by U.K. telecommunications giant Vodafone and Verizon Communications, and Deutsche Telekom owns T-Mobile USA. AT&T itself accepted a $9.8 billion investment from Japan’s NTT Docomo in 2000.
It is too early to tell whether regulators will balk at Softbank’s bid to gain control of Sprint, but analysts examining the deal have so far raised few alarm bells about the government’s view on foreign ownership.
If regulators clear Softbank’s partial buyout of Sprint, AT&T will be the country’s only top-tier operator without substantial foreign ownership.
The influx of Softbank equity will strengthen Sprint, AT&T’s closest competitor other than Verizon, adding $8 billion to its balance sheet and providing it with a cash-rich backer. Sprint is a distant competitor to AT&T, with just 56 million subscribers, compared to AT&T’s 105 million customers.
AT&T and Sprint have clashed frequently in recent years, especially over AT&T’s failed merger with T-Mobile. Sprint and a number of other smaller providers have repeatedly called AT&T and Verizon a “duopoly” and suggested AT&T would like to gain monopolistic control over wireless, as it once held over landline telephones. AT&T has dismissed the allegations.
