AT&T Claims Sprint’s Charges Were Erroneous in Public Spat

+5.74%
Upside
17.30
Market
18.29
Trefis
T: AT&T logo
T
AT&T

In an FCC document filed last week, AT&T (NYSE:T) claimed that Sprint’s (NYSE:S) arguments were two-faced, pointing out contradictions between its public arguments and its confidential responses to the Federal Communications Commission (FCC). [1] AT&T had earlier won the right to access Sprint’s confidential documents relevant to AT&T’s defense against the Department of Justice (DoJ). This included data on Sprint’s recent addition of Apple’s (NASDAQ:AAPL) iPhone as well as any plans for a “business combination” with T-Mobile in the event the AT&T transaction is blocked. (See AT&T Notches a Small Win in Sprint’s Suit Against T-Mobile Deal)

The latest filing was in response to Sprint’s own filing to the FCC last month that spelled out discrepancies between AT&T’s comments to regulators and those to its investors. The filing stated that AT&T told regulators that the merger will create jobs, while its comments to investors suggested workforce reductions.

Both Sprint and AT&T have been sparring in public ever since AT&T moved to acquire T-Mobile. So, while there may be some truth to AT&T’s claims, this is clearly a publicity war and no more should be inferred from this than a ploy by AT&T to publicly undermine Sprint’s credibility as the face-off gets uglier. [2]

Relevant Articles
  1. Down 50% From 2021, We Think There’s Upside For AT&T Stock
  2. Will AT&T Stock See Gains Post Q2 Results?
  3. At $15, AT&T Stock Appears Oversold
  4. AT&T Stock Held Up In A Tough Market. What Does 2023 Hold?
  5. What’s Happening With AT&T Stock?
  6. AT&T Falls 9% In A Month. Will It Recover?

We maintain our AT&T price estimate of $38, which is about 30% above market price.

See our complete analysis for AT&T stock here

Sprint’s dichotomous arguments

When Sprint filed its lawsuit in early September to block the AT&T/T-Mobile deal, it argued that the deal would make the U.S. wireless market an effective duopoly, and one of the effects would be that Sprint would not have access to the best wireless handsets, an important parameter in attracting subscribers in the U.S. telecom market (see Sprint Jumps on the Dog Pile and Sues AT&T). Sprint has also publicly claimed that AT&T faces no spectrum crisis, and that AT&T’s acquisition of T-Mobile would give the combined company too much spectrum, cut jobs, and hurt Sprint’s independent existence.

AT&T, however, said Sprint’s confidential submissions show that Sprint privately doesn’t believe in any of its public claims. The submissions apparently reveal that Sprint holds the strongest spectrum position out of any U.S. provider and concedes that AT&T faces major spectrum constraints. Further, it said that Sprint admitted that it wasn’t at a disadvantage when it comes to accessing new handsets. [1]

We have already discussed how we thought the iPhone deal would hurt Sprint’s arguments against the deal. (See AT&T May Benefit the Most from Sprint’s iPhone Deal)

Merger will help leapfrog Verizon’s reach

AT&T has consistently argued that the U.S. wireless industry will remain competitive if the T-Mobile purchase were to gain federal approval. In expanding its 4G LTE network and merging the two companies’ wireless networks, AT&T has maintained that the deal would create jobs and generate economic growth. If the deal goes through, AT&T would acquire additional spectrum, which will help it expand capacity, improve service and give it a competitive edge over Verizon.

However, if it doesn’t, AT&T will have to pay T-Mobile parent Deutsche Telekom an estimated $6 billion in cash and other assets as part of the original deal.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. AT&T: Sprint’s public, private claims are two-faced, CNET, November 15th, 2011 [] []
  2. AT&T Holds Sprint to Account, The TelecomBlog, Nov 2011 []