Qwest Communications has filed the first of an expected series of protests against the SBC Communications-AT&T merger, telling California regulators the combined company would hurt consumers and businesses.
In a document made public Monday, Qwest also asked the California Public Utilities Commission to examine the SBC-AT&T merger along with a proposed union of MCI Inc. and Verizon Communications Inc.
“It is difficult to see how these two transactions could ever be found to be in the public interest,” said Qwest, which has been spurned in its multiple efforts to buy MCI.
Denver-based Qwest Communications International Inc. plans to file additional protests as other states begin considering the mergers.
“We’re likely to file where we believe industry concentration threatens competitive and customer interests,” spokesman Bob Toevs said.
SBC spokesman Dave Pacholczyk said Qwest “seems to be of two minds. They want to merge with MCI, but they don’t want us to merge with AT&T. We’re mystified by the contradiction,” he said.
The filing comes as Qwest continues to weigh its options for the pursuit of the Ashburn, Va.-based MCI.
Qwest, the dominant local phone carrier in 14 Northwestern and Western states, first broached the competitive argument in late February. It contends industry consolidation will eliminate competition, which could lead to higher prices.
Qwest Chairman and CEO Dick Notebaert argued last month that an MCI-Qwest merger would allow more competition than MCI-Verizon. Representatives of Verizon, MCI, SBC and AT&T have said their mergers will provide for plenty of competition.
Earlier this month, MCI rebuffed Qwest’s $8.9 billion buyout offer in favor of a $7.5 billion deal with New York-based Verizon, the predominant local phone company in the Northeast.
MCI’s board has voiced concern about Qwest’s financial health — it has $17 billion in debt — and the long-term value of the shares Qwest would use as partial payment to MCI shareholders.
San Antonio-based SBC agreed in January to acquire AT&T for $16 billion.
In the filing, Qwest asked California regulators to examine the plans of SBC and Verizon for competing in each other’s territories if the deals are finalized.
It noted that other states likely will commence similar investigations. “Regulators will have to examine this level of concentration and evaluate its potential to harm consumers through higher prices, reduced service quality and less innovation,” Qwest wrote.