AT&T, T-Mobile Deal 'Shocked' Sprint CEO
Sprint Nextel CEO Dan Hesse on Tuesday said he was "shocked" to learn AT&T plans to purchase Deutsche Telekom's T-Mobile USA for $39 billion, a deal that would create the largest U.S. wireless carrier if approved by regulators.
"It was surprising because quite frankly, I didn't think that it would be possible for, let's say one of the big two [carriers] to acquire either No. 3 or 4," Hesse told Cramer on "Mad Money." "We thought the likelihood of something like this happening was very remote. So we do a lot of scenario planning, [but] that one was not on our radar screen."
It remains to be seen how the proposed union between AT&T and T-Mobile might affect pricing, Hesse said. Yet the deal would give tremendous market power to just two companies, he added. Should regulators approve the merger, he thinks it would open the window for Sprint to merge with Verizon Communications . At that point, Hesse noted more than 90 percent of the market would be controlled by just two companies, which he doesn't think would be good for a competitive marketplace.
From a glass half-full perspective, Hesse noted AT&T cited spectrum as a reason for doing the deal with T-Mobile. Based on Sprint's trajectory in terms of subscribers and metrics, Hesse wonders what Sprint is worth if T-Mobile is valued at $39 billion.
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