Anna Eshoo, Other Lawmakers Offer Gushing, Facts-Optional Support For T-Mobile Sprint Merger

Wireless

from the ill-communication dept

We’ve repeatedly explained how T-Mobile and Sprint’s latest attempt to merge will be terrible for both jobs and competition. Despite what T-Mobile and Sprint executives have claimed, history suggests the reduction of total wireless carriers from four to three will likely result in less incentive than ever to seriously compete on price. Similarly, while T-Mobile and Sprint have told regulators that the deal will somehow create an explosion in new jobs, Wall Street analysts have predicted that the deal could kill off tens of thousands of US jobs as the new company inevitably eliminates redundant positions.

This was the same Sprint, T-Mobile merger that had been blocked previously by lawmakers. And it’s not a far cry from AT&T’s attempted takeover of T-Mobile, which was also blocked back in 2011. Generally speaking, people have recognized that reducing overall competitors in a telecom market never quite works out well for anybody other than executives and investors. Yet here we are, once again, with folks oddly not quite understanding that reality.

Case in point, Anna Eshoo and numerous other House lawmakers fired off a letter (pdf) this week to both the DOJ and FCC urging both agencies to approve the merger post-haste. One of the cornerstones of the letter is that the merger is essential for the US quest to deploy 5G networks, something the carriers themselves at various points have admitted is not actually true. It also repeats the claim that eliminating one of just four competitors will somehow increase competition, something disproven by any economics 101 textbook (and 50 years of telecom history, including Canada’s).

But, as is usually the case when it comes to breathless support for harmful megamergers, the letter’s primary claim is that the deal will somehow create all manner of new jobs:

“We anticipate that the combination of T-Mobile and Sprint, compete with the respective resources and strengths of each, will help to preserve the jobs of workers at each company. This holds the potential demand for new workers as a result of a more broadly robust, innovative, and thriving wireless telecommunications sector.”

Again though, that’s not what the actual data (or history) suggests. In fact, Wall Street analysts have been noting for two damn years now that the deal has the potential to cost anywhere between 10,000 and 30,000 jobs, particularly as redundant retail operations and duplicative HQs are streamlined:

“Direct payroll savings have been a big part of each analysis of a merger between the nation?s third- and fourth-largest wireless carriers. Few of those reports, however, have put a number on the headcount reductions. One that did was by Craig Moffett of MoffettNathanson Research. Last August, he put pen to paper and found reason to expect 20,000 job cuts from a merger.

Moffett?s report showed most of those would be retail workers. Sprint and T-Mobile each want more retail outlets, but a combined company wouldn?t need as many stores as both have currently. It would make business sense to close stores near each other. ?We conservatively estimate that a total of 3,000 of Sprint and T-Mobile?s branded stores (or branded-equivalent stores) would eventually close,? Moffett?s report said. Each of those, he said, would mean the loss of five full time jobs, or 15,000 jobs in total.

Some analysts peg the losses closer to 10,000, while others believe 30,000 lost jobs is possible over time (more than Sprint even currently employs). Unions have argued that the number of total lost positions could be somewhere around 28,000, including 4,500 from the inevitable closure of Sprint’s current Overland, Kansas HQ (which T-Mobile is telling everyone will remain open). If you’ve tracked megamergers at companies like Comcast, AT&T, and Verizon, these kinds of projections aren’t really that outlandish, they just tend to get lost in the shuffle since only academics and consumer advocates tend to care about the reality post-merger.

The fact that T-Mobile CEO John Legere is kind of a fun dudebro has netted T-Mobile a lot of benefit of the doubt where it probably shouldn’t exist, overshadowing how despite being a company with pro-consumer branding, much of the company’s behaviors (like opposing net neutrality or pandering to Trump) aren’t all that different from the companies (AT&T, Verizon) T-Mobile claims to be so much better than. Given more than a few of these Representatives have spent significant time insisting they’re consumer allies on telecom issues, their breathless support of a bad deal is somewhat disappointing.

Filed Under: anna eshoo, competition, jobs, mergers, mobile phones
Companies: sprint, t-mobile