NEW YORK (Reuters) - A deal that reduces the U.S. mobile market to three national operators from four could raise eyebrows at regulators and require the merging parties to sell spectrum, according to Verizon Communications Chief Executive Lowell McAdam.
McAdam was responding on Tuesday to a question about whether such a deal could be approved at an investor conference after reports that No. 3 U.S. mobile service Sprint Corp is looking into the possibility of buying No. 4 rival T-Mobile U.S..
While the executive said he does not have any inside knowledge about U.S. regulators’ thinking he said that a current escalation of mobile competition may be the result the government was looking for when it blocked No. 2 mobile operator AT&T Inc from buying T-Mobile in 2011.
“I think they’re (regulators are) beginning to see some of the things they wanted to see from four competitors ... so I think they’ll want to play out that hand,” McAdam said during a webcast of an investor conference in Las Vegas.
McAdam suggested regulators would only approve any Sprint/T-Mobile deal if the companies involved agreed to sell a lot of their spectrum as a condition for approval.
“I’ll look forward to all the spectrum that’ll be divested from that group,” as a result of such a deal, McAdam said.
Demand for wireless airwaves has risen sharply as U.S. operators scramble to boost their networks to support increasing consumer Web surfing and video use on cell phones.
McAdam has made no secret of the fact that Verizon Wireless, Verizon’s venture with Vodafone Group Plc, is always on the lookout for opportunities to buy more spectrum.
The executive was asked if Verizon Wireless would consider some kind of spectrum sharing deal with satellite TV provider Dish Network, which owns spectrum but has no network on which it can put the spectrum to use.
McAdam said that he thinks Dish Chairman Charlie Ergen has spoken to everybody in the industry about his options but he said “a model may emerge but so far a model hasn’t emerged. Time will tell whether there’s something there for both parties.”
Asked about increasing competition being stemmed by aggressive discounting by T-Mobile, McAdam said that “price competition is typically short-lived” in the mobile industry.
The executive said he expects Verizon to work with content providers this year to test mobile Internet-based video services. These are known in the industry as “over-the-top” services because they do not use traditional cable networks.
Verizon currently competes with cable companies with its FiOS home television service. It plans to close a deal to buy Vodafone’s 45 percent share of Verizon Wireless in late February.
Reporting by Sinead Carew; Editing by Chris Reese