Last updated: May 12, 2011 2:22 am

Telecoms heads defend planned $39bn tie-up

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The heads of AT&T and T-Mobile USA went before a Senate subcommittee on Wednesday to defend the planned $39bn merger between the two companies in the face of stiff opposition from smaller carriers fearful of what they called a new “duopoly”.

“We fell behind Europe because of the lack of innovation because it was a duopoly,” said Daniel Hesse, chief executive of Sprint Nextel. “The US is now number one in the world in terms of innovation. Google, Apple and Microsoft developed on our shores for a reason. My concern is that if you go back to a duopoly we will lose that edge and the US will fall behind again.”

Randall Stephenson, chief executive and president of AT&T, said the deal would result in improved service quality and network capacity, while fostering innovation and increasing competitive pressure. He said the merger would help the roll-out of the company’s 4G network.

Herb Kohl, Democratic senator and chairman of the subcommittee, said AT&T and T-Mobile USA would have to prove the merger would not damage competition, which was his “suspicion”.

The deal would combine the nation’s second- and fourth-largest providers of wireless communications, which has caused some to call for it to be blocked.

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