AT&T CEO said Sprint and T-Mobile will have "a tough hill to climb" to get merger approval from U.S. regulators.

"It's a classic horizontal merger where they are taking a competitor out of the marketplace," Stephenson said. "Power to them if they get it done."

The comments are Stephenson's first on the deal since Sprint and T-Mobile announced a $26 billion merger last month. Stephenson spoke at the Code Conference in Rancho Palos Verdes, California on Wednesday.

Stephenson declined to take a position on whether or not the deal should get approved, arguing that his comments would get twisted because of AT&T's potential conflict of interest related to the deal's outcome.