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Sprint CEO planning 'nukes' to block AT&T, T-Mobile merger


Sprint CEO Dan Hesse said in an interview that he plans to launch "nukes" in his fight to stop AT&T's proposed acquisition of T-Mobile USA.

Hesse offered Bloomberg's Greg Bensinger a rare glimpse into the "White Room" where he plans his offensive against AT&T, using the room's nearly wall-to-wall whiteboards to "map out "nukes" in red, blue and green ink."

In addition to Sprint's resources, the CEO has invested his own personal resources in stopping AT&T. His strategy has included lobbying Congress, courting technology CEOs to speak out against the deal and convincing state regulators to examine the acquisition. And, according to the interview, Hesse has "other tactics" up his sleeve.

AT&T announced in March that it had reached an agreement to purchase T-Mobile USA from parent company Deutsche Telekom for $39 billion. The deal has quickly come under federal scrutiny, with the U.S. Senate, Department of Justice and Federal Communications Commission all getting involved.

In May, Sprint filed a formal petition with the FCC objecting to the merger. AT&T responded by claiming the deal would have no effect on the competitive landscape.

For Hesse, the deal represents a life-or-death situation for Sprint. During a Senate hearing last month, senators asked him what Sprint's likelihood of survival would be if the proposed merger took place. "My position is that it would more difficult for Sprint to compete," he replied. "This would be a duopoly, and it would put Sprint to be acquired."

Hesse believes he's fighting not just for Sprint's survival but for the good of the industry and American consumers. “The industry just won’t be as innovative and as dynamic as it has been,” he said during the interview. “It’ll gum up the works when everything has to go through these two big tollbooths, one that’s called AT&T and one that’s called Verizon.”

However, AT&T maintains that the merger would help the wireless operator to operating more efficiently, cut costs, and thereby benefit customers. “Their arguments about prices going up just defy economic logic,” said AT&T General Counsel Wayne Watts. “We’ve had wireless transactions multiple times over the last ten years and prices have gone one direction: they’ve gone down.”

According to the report, the executive has enlisted "lobbyists, consulting groups, two former U.S. House Judiciary Committee counsels and lawyers at Skadden, Arps, Slate, Meagher & Flom LLP." Regardless, he may find himself outgunned, as AT&T outspent Sprint in Washington by more than 12-to-1. In 2009 and 2010, AT&T contributed $3.26 million to federal candidates, while Sprint donated just $257,500.

Interestingly enough, Hesse spent 23 years at AT&T, and ran the company's wireless business for three years before leaving in 2000. He insists, however, that his campaign against the deal isn't personal.

Analysts have voiced concerns over Sprint's long-term post-merger chances. “If the deal goes through, Sprint remains the No. 3 player in the industry; their ability to ever become an AT&T is shut off forever,” said Credit Suisse AG analyst Jonathan Chaplin, who expects the merger will be approved.

However, Hesse remains optimistic. “An underdog is not thinking about the point spread; they’re thinking about winning the game,” he said. “We can win this.”