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Sprint Nextel challenges AT&T's bid for BellSouth

Dow Jones Newswires

NEW YORK - The American Civil Liberties Union, a group of small telecommunications companies and Sprint Nextel Corp. have joined to oppose AT&T Inc.'s bid to acquire BellSouth Corp.

In filings with the Federal Communications Commission, the ACLU said it wants the commission to hold up approval of the merger until the phone companies settle allegations that they had released customer information to the National Security Agency.

Sprint and the telecom group, meanwhile, are looking to squash the deal completely, with the group citing ''irreparable harms to competition'' from a combination.

Experts, however, still believe the deal will go through.

AT&T dismissed the claims. ''There is little overlap between the two companies and competition is well established in the markets where both companies now operate,'' said spokesman Michael Coe. ''There are always those who'll try to use these proceedings to advance their own, narrow special

interests.''

San Antonio-based AT&T, which is the No. 1 phone service provider in the United States, will further cement its top position after acquiring Atlanta-based BellSouth, which is the No. 3 player and dominates the Southeast region, in the $67 billion deal. AT&T will also take full control of Cingular Wireless, the largest wireless carrier by customer base.

Sprint argued that the combination would mean that it would be more dependent on AT&T for connecting to its cell-phone towers. ''Sprint Nextel has no alternative to BellSouth or AT&T for more than 99 percent of Sprint Nextel's PCS cell sites in the BellSouth and AT&T service areas,'' the company said in its filing.

In a separate filing, the telecom group, led by XO Holdings Inc., said the merger only creates a larger monopoly with a greater ability to thwart competition between rival providers, as well between AT&T and BellSouth.

AT&T is ''quickly reassembling the old Bell System,'' XO Communications spokeswoman Heather Gold said.