BUSINESS
03/30/2011 04:10 pm ET | Updated May 30, 2011

AT&T CEO: T-Mobile Deal Won't Raise Cellphone Bills

By Kenneth Li

NEW YORK (Reuters) - AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) Chief Executive Randall Stephenson disputed the commonly held belief that consumer bills would rise if there were fewer competitors in the U.S. wireless market.

AT&T's defense comes as it girds for a tough regulatory review of its $39 billion deal to snap up Deutsche Telekom AG's (DTEGn.DE: Quote, Profile, Research, Stock Buzz) T-Mobile USA, the No. 4 U.S. mobile operator known for its lower prices. The deal would create a new industry leader. The combined company and Verizon Wireless, the current largest U.S. provider, would hold nearly 80 percent of the market.

Stephenson, who spoke to a New York event sponsored by the Council on Foreign Relations on Wednesday, referred to a government report that showed prices on average fell 50 percent over the last decade despite five wireless mergers over the period.

Concerns over surrendering too much control to few players prompted New York Attorney General to conduct a thorough review of the deal.

Asked in an interview with Reuters global editor-at-large Chrystia Freeland about the need for price restrictions as a condition to garner regulatory approval, Stephenson said, "I'm not sure of the relevance of it.

The U.S. market "is the most highly competitive in the world."

Stephenson said AT&T consumers once paid around $1.90 per megabyte of wireless data and now pay around 16 cents.
The benefits of the merger would be nearly immediate, he said. In New York, where users of the Apple (AAPL.O: Quote, Profile, Research, Stock Buzz) iPhone have complained about dropped calls and slow wireless data speeds in certain areas, capacity would rise by 30 percent.

AT&T expects the acquisition to raise its infrastructure spending by $8 billion over a seven year period.

Among other benefits of the deal, Stephenson said AT&T also planned to work with Deutsche Telekom on lowering roaming charge costs, which cellphone users are required to pay when using their phones outside of the subscriber's market.

Shares of AT&T traded up 73 cents, or 2.4 percent, to $30.78 on the New York Stock Exchange.

(Reporting by Kenneth Li, editing by Dave Zimmerman)

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