Here’s Why Feds May Now Block the AT&T Merger

According to reports in Bloomberg and various news outlets this morning, AT&T (NYSE:T) and competitor Sprint (NYSE:S) have received subpoenas from nine state attorney general’s offices seeking more information about the pending merger between AT&T and T-Mobile USA. In the proposed deal AT&T would pay $39 billion to swallow T-Mobile, overtaking current leader Verizon (NYSE:VZ) to become the largest wireless carrier in the country. The news comes in addition to an announcement in late June that the Justice Department had notified AT&T that it planned to broaden its inquiry towards the pending merger.

Initially the proposed deal had engendered opposition in both the public and private sector, with Sprint among the deal’s most adamant nay-sayers. The company created an independent website, notakeover.org, that lines out the drawbacks of a possible merger and provides users with links to express their disapproval to Congress and the FCC. Among the Sprint-sponsored website’s claims are that the buyout would reduce competition, hurt the industry, hurt the economy, and do little to increase customers’ wireless service quality.

AT&T (NYSE:T) is not without its allies, and quickly responded to Sprint’s anti-trust campaign by garnering support from a jumble of friends in Silicon Valley, including Microsoft (NASDAQ:MSFT), eBay (NASDAQ:EBAY), Facebook, and many others, who drafted a joint letter to regulators arguing in favor of the merger.

It now appears that Feds are taking Sprint’s (NYSE:S) marketing efforts more to heart, as the ramped up investigation shows that AGs nation-wide are skeptical of the deal. According to a rep. from the Minnesota Attorney General’s Office, the state’s AG is “concerned about the merger,” because “It’s hard to see how four companies going down to three, basically less competition, would benefit consumers.” Officials from other state’s offices declined to comment.

More from The Cheat Sheet