Analysts Predict Sprint, T-Mobile Merger Will Be A Massive Job Killer

from the synergies,-yo dept

For much of the year, Sprint has been trying to butter up the Trump administration to gain approval for a merger with T-Mobile. Sprint’s previous attempts at such a merger were blocked by regulators, who correctly noted that reducing wireless competitors from four to three would raise rates and reduce carrier incentive to improve and compete. But with the Trump administration spearheading a new wave of mindless merger mania in the telecom space, Sprint is poised to try again, and is expected to formally announce its latest attempt to acquire T-Mobile in just a matter of weeks.

Of course like any good merger, that will involve countless think tankers, lobbyists, consultants, fauxcademics and other policy voices willfully ignoring M&A history, insisting that the deal will magically spur competition, save puppies, cure cancer, and result in countless thousands of new jobs. But many respected sector analysts are busy noting that the job is expected to be a mammoth job killer. How much of a job killer? One analyst predicts the merged company could result in more net job losses than the total number of employees Sprint currently has:

“Together, the companies reported employing 78,000 in their most recent disclosures. Sprint, based in suburban Kansas City, accounts for 28,000 of those, and T-Mobile for 50,000. Merging the companies, said a report by Jonathan Chaplin of New Street Research, could eliminate ?approximately 30,000 American jobs? ? which is more than Sprint employs.

Craig Moffett, another major Wall Street analysts, has previously predicted the net job losses could possibly be somewhere closer to around 20,000:

“Last August, (Moffett) 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. A merger also would threaten ?overhead? jobs, the kind concentrated in headquarters such as Sprint?s and T-Mobile?s in the Seattle area.

Of course that will be the precise opposite of the claims you’ll start seeing over the next few weeks as the lobbying sales pitch for the megamerger heats up with the help of an often unskeptical media. Ignored will be the fact that the government’s decision to block AT&T from acquiring T-Mobile helped foster some real competition in the space, resulting in the return of simpler, unlimited data plans. Also ignored will be the fact that the remaining three companies — T-Mobile, Verizon and AT&T, will have less incentive than ever to engage in real price competition, potentially resulting in unlimited data being killed off again.

Most of these sales pitches will attempt to paint a picture where Sprint was going to collapse anyway, despite a deep-pocketed owner in Japan’s Softbank — and an improving balance sheet. But there are countless M&A options for the company that don’t involve reducing competition in the space, including an acquisition by Charter and Comcast (who want to bundle wireless with cable and broadband service) or French-owned Altice, which has been gobbling up U.S. cable companies and has expressed its own interest in jumping into the wireless space.

Despite the obvious job losses and competition reduction, few expect the Trump administration to block the deal, since approving it will let the President, as is his tendency, proudly convince his loyal base he helped create jobs that technically don’t exist. Sprint and its Japanese owner Softbank already paved the road for this bullshit parade earlier this year, when it let Trump falsely claim credit for thousands of Softbank jobs that technically may never arrive, and were announced long before Trump was even elected anyway.

In very 2017 fashion, expect none of this to matter once the merger sales pitch begins in earnest over the next several weeks.

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Companies: sprint, t-mobile

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Comments on “Analysts Predict Sprint, T-Mobile Merger Will Be A Massive Job Killer”

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SomeDude (profile) says:

T-mobile might be not evil

One correction is that Sprint would be merging with T-Mobile, as the Resulting Company would have T-Mobile as the Majority shareholder.
I think this is important as T-mobile is probably the only Telcom that is actively expanding and innovating in US. They have majorly expanded their network and recently acquired new bandwidth from the FCC. So T-mobile as the Majority company may not be as bad as Sprint as the Majority company.

OldMugwump (profile) says:

"Killing" jobs is what progress is all about

If you oppose the merger, probably this report isn’t something you want to emphasize.

"Killing" jobs is pretty much the definition of progress.

Doing more with less – providing the same services while freeing up resources (in this case labor) for other things – is what progress is all about.

The Industrial Revolution was "progress" because it killed farmer jobs by automating them with machinery, freeing up the farmers to take industry jobs – thus producing both food and industrial goods with the same number of workers.

And making everyone wealthier in the process.

Ya, it’s no fun when it’s your job that gets killed, but that transition cost (trauma, for many) is the price of progress. And always has been – this is economics 101.

I oppose the merger because it will decrease competition in the cell services business (and there isn’t much to start with, thanks to FCC, state, and local rules that support monopolies).

But "jobs" isn’t a good reason to oppose it.

Vel the Engimatic says:

Re: "Killing" jobs is what progress is all about

It actually is a good reason to oppose it.

What you’re failing to understand here is that we have millions of people in this country, and despite what you think, losing 30,000 potential job positions means 30,000 less opportunities for people to work. That’s pretty significant.

You’re willfully downplaying the consequences to say “Oh, this isn’t so bad!”

Well, you’re also ignoring the fact that companies merging together will decrease competition in the telecom space, as stated in the article above.

Use your brain and think about this when I say the following:

If there is nobody around who can do what you do better than you, then why would you innovate if you didn’t need to make the way you do things better to compete with them? Just the sake of it?

Anonymous Coward says:

Re: Re: "Killing" jobs is what progress is all about

Well, you’re also ignoring the fact that companies merging together will decrease competition in the telecom space

Reread the comment you’re replying to: "I oppose the merger because it will decrease competition in the cell services business"

I tend to agree. We don’t actually need 3 sets of wired phone lines, cell towers, TV cables, water pipes, electrical lines, roads, etc., everywhere. It would be great for competition and create lots of jobs, but would be a make-work project really. There are better solutions to our problems than work-duplication but nobody has the political will to implement them. I say let Sprint and T-Mobile merge, if they divest their consumer divisions. They can become an open-access wireless infrastructure provider which other companies can sell phone/data service on top of.

If there is nobody around who can do what you do better than you, then why would you innovate if you didn’t need to make the way you do things better to compete with them? Just the sake of it?

Yes, that’s basically the history of science right there. Commercialization generally follows the innovation, often in ways the innovators never could have expected.

Anonymous Coward says:

Re: Re: "Killing" jobs is what progress is all about

Well, you’re also ignoring the fact that companies merging together will decrease competition in the telecom space, as stated in the article above.

Did you miss the part where he specifically says "I oppose the merger because it will decrease competition in the cell services business (and there isn’t much to start with, thanks to FCC, state, and local rules that support monopolies)"? That’s a funny definition of "ignoring" you have.

And he has a point on the jobs. If the merged company can provide the same level of service with fewer employees, that would allow them to increase their profits, or to drop their price, or to re-deploy those employees to other tasks to improve service.

Of course, without competition, it will all go into profits instead of lower prices or better service. But eliminating jobs is pretty much the only way to cut costs, and you’ll never get lower prices on anything if "jobs" is our primary consideration.

Anonymous Coward says:

Re: "Killing" jobs is what progress is all about

“”Killing” jobs is pretty much the definition of progress.”

I disagree, I think it is one of many possible outcomes resulting from progress. Possibly I am using wider criteria for the word progress.

“Doing more with less – providing the same services while freeing up resources (in this case labor) for other things – is what progress is all about.”

Ok, this is one aspect of what could be considered to be progress.

“And making everyone wealthier in the process.”

Now this is simply wrong.

“the price of progress”

Funny (not) how those who are forced to “pay” are typically of the lower classes. Rich folk do not “pay” for what you call progress in the same manner, their payment is in political contributions to position themselves into a profitable situation or something of that nature.

“… it will decrease competition in the cell services business …. But “jobs” isn’t a good reason to oppose it.”


Wendy Cockcroft (user link) says:

Re: Re: Re: "Killing" jobs is what progress is all about

Old Mugwump, if people don’t have money they can’t spend it. They also tend to rely on the rest of us to keep them afloat.

When my wage went up I was able to buy more, thereby improving (by a miniscule percentage, I’ll grant you) our local economy. Multiply that by my fellow call centre workers who also got a pay rise and you get where I’m coming from.

Supply-side economics depends on forgetting that businesses need customers with money to spend on them. Killing jobs is bad for all of us, is what I’m saying. I’m seeing this unfold in real time where I live as my own wage is frozen and others are being laid off due to cut-backs in spending as Brexit kicks in.

OldMugwump (profile) says:

Re: Re: Re:2 "Killing" jobs is what progress is all about

Wendy, people have been making that argument since Ned Ludd smashed spinning jennys.

Yes, of course people need money to make the economy run.

But it matters where and how they get it. When jobs are "killed" because of efficiency improvements, that frees up employees to take new jobs making new things, that weren’t being made before.

(Eventually, most of them. Not saying it isn’t traumatic for many to have to switch.)

In the end both the old things and the new things get made. More stuff getting made + same number of people = more wealth in total. Progress.

Wendy Cockcroft (user link) says:

Re: Re: Re:4 "Killing" jobs is what progress is all about

Thank you for responding, Old Mugwump. However, I’m not a Luddite. I just have a massive problem with people who wibble on about the glory of the free market one minute then cheer on monopolisation the next (not that I’m accusing you of doing so).

RE: progress: bring it, but also spare a thought for the people left behind by it. The market doesn’t always provide.

RE: more wealth in total, it ain’t trickling down. The number of homeless people I nearly trip over on my way home from work has doubled in the last year and increasing numbers of them are women. Workers ought to be given a fair share of the wealth they generate via profit-sharing schemes, etc. Concentrating wealth in the hands of the few in the misbegotten notion that they’ll create more jobs with it or that they’ve earned all that all by themselves is proving to be a bad idea in real time.

OldMugwump (profile) says:

Re: Re: Re:5 "Killing" jobs is what progress is all about

Thank you, Wendy, for your (as always) civilized and reasonable reply.

I completely agree with everything you’ve just said. I do support free markets, but I also hate monopolies – esp. those propped up by governments playing favorites – with a passion.

Free markets don’t mean anarchy – they depend on firm, well-enforced rules of fair dealing. Cronyism and rigging of rules to help the politically well-connected (as is endemic in the telecom industry) is the antithesis of free markets.

And I fully agree that we need to provide better for those harmed by the changes that progress requires. Nobody should be a sacrifice for the greater good. Personally I support a Universal Basic Income, but there are other ways to do it.

But we must find ways to ensure that progress happens – because in the long run that’s the only way to reduce human suffering and create prosperity for everyone.

Luddite arguments are bad arguments – even if they’re arguing for a good policy (as here).

Anonymous Coward says:

Thumbs Up!

Regulation is going to save us like it has always done.

I say stop blocking any of these and just let them happen. The free-market is clearly a failure so lets just have government own it all like in Venezuela, and when you moaners start moaning about how government is failing to take care of you, they can lead load your silly tookus like they do down there.

Its a win-win-win.
Government still pleasures you in the bum along with the businesses.
The Nanny state gives you what it thinks you should be allowed to have.
And dissidents get put down so they can no longer pollute the nanny state solution with any “other” ideals.

Anonymous Coward says:

Re: Re: Re:2 Thumbs Up!

No, THAT was the false dichotomy.

Regulation is not an ALL or nothing deal. The problem with your side is that you have ZERO control or sanity with regulation. The only regulation you will bring about is regulatory capture that very problem you a “claiming” to avoid with capitalism building monopolies. Other times you folks ignorantly claim that free-market creates monopolies which is an ignorant remark on its own.

You clowns don’t even know which economic model you should be blaming for which problem so of course you won’t be smart enough to know that the solutions you are asking for are going to cause the very thing you are trying to avoid.

Your only cry is… “government save me”

Well, you are NEVER going to be saved. You will, however, be abused… good luck with that!

The Wanderer (profile) says:

Re: Re: Re:7 Thumbs Up!

A mixed economy with a strong social safety net will always be the best option for a healthy society.

While this may be true… that idea itself would be an -ism, although I don’t know whether it has a name yet, and so to state it as you have done would seem to contradict the principle from your preceding question.

Anonymous Coward says:

Re: Re:

Any type of merger is going to kill jobs! It’s not just the Telecom industry. The simple matter is you’re going to end up with multiple people doing the same jobs. Cut costs, save money, means firing the extra people.

I was chatting with the a person swapping out the power meter for a new Smart One. He was putting himself right out of a job along with a whole lot of people who wouldn’t be reading meters at everyone’s house anymore. All those thousands of meter reader jobs, GONE! Toll Both Jobs going away with FASTRAK. I don’t think there’s any toll people taking money anymore on the Golden gate bridge. It’s all Fastrak and Licence plate readers to charge you. That speeds up the flow much better, but more jobs lost.

What a lot of these jobs have in common? I call them ZERO Skill jobs. It doesn’t take much to train someone to do many of these jobs. If you lose the person, it’s easy to replace the person. They’re jobs a monkey could almost do.

You expect $15-$20 a hour to flip a burger at a fast food place, you’re in effect killing your job that much faster because now it’s cheaper to just fire most of the employee’s and automate. Look at Roboburger on youtube and that thing is primitive with what I know can be done, but that’s coming. Self Check Out stations in stores. 1 person watches 4 stations. So 3 out of 4 jobs lost! 2 shifts, 6 out of 8 jobs lost per store. That’s really how you have to look at it.

You need to get into a job where you can’t be easily replaced. That requires SKILL. Fixing those machines would be a higher paying, skilled job.

Sprint/T-Mobile merger is a bad thing. I’m not looking at it killing 30,000 jobs so much as creating even less competition, and raising prices on MILLIONS of people!!!

Just look at all the many things T-Mobile has done over the last few years which effected everyone else in better services and prices.

Anonymous Coward says:

of course it will! but no one, including Trump gives a toss about jobs lost as long as the top boys in the company(s) get plenty in salaries and bonuses! all he is and ever has been interested in is ensuring his friends, the haves, continue to have and increase their haves while the have nots continue to lose out as much and as often as possible for as long as possible. the bigger problem is that there are so many have nots who still dont realise/dont accept just how much is being taken from them/that they are losing out on. they have all been well and truly hoodwinked, to coin a phrase!



the prob with your analogy was that you had some job you could migrate not that didnt require massive reinvestment of time , money and education to change, and that in fact there are the later types of jobs available…..when you dont , all your dong s no longer creating wealth your destroying it in long term for short term gains….as eventually no one has any jobs how can one sell anything….it’s that simple as we head to this age …i call the informational age of unemployment….

Michael (profile) says:

Sprint and T Mobile Merger

I think a merger between Sprint and T-Mobile would actually create improved competition in the wireless sector. If you combine the coverage Maps for TMobile and Sprint you get something a lot closer to ATT and Verizon Coverage. One of the biggest customer concerns for wireless especially business is coverage! The Sprint Coverage Map is terrible! They need the expanded coverage an acquisition of T Mobile would give them to compete long term with ATT and Verizon. They are so far behind in Building a Nation wide network they can never keep up with ATT and Verizon. The combined network would be able to improve service coverage more cost effectively!

SirWired (profile) says:

Re: Re: Won't be a problem much longer

All the carriers are in the process of deprecating their 3G networks in order to free up that bandwidth. When that process is complete, everybody will be on VoLTE/LTE (and whatever 5G standards come around.)

This presents no more of a problem than when Sprint bought Nextel and their odd-duck iDEN setup.

I’m pretty sure Sprint and TMo noticed this in their business case when figuring out the price/costs for the merger.

Anonymous Coward says:

Re: Sprint and T Mobile Merger

Mergers imply less companies competing within a given market and yet you claim this means more competition.

Then you go off on a tangent about coverage and competing with ATT & Verizon while ignoring the fact that many locations only have access to one of these providers.

I don’t get it.

Anonymous Coward says:

Re: Re: Sprint and T Mobile Merger

Then you go off on a tangent about coverage and competing with ATT & Verizon while ignoring the fact that many locations only have access to one of these providers.

I don’t get it.

There are two aspects to wireless competition: which providers are available in my area, and which have good nationwide coverage. If I travel a lot, knowing what providers are available in a specific location isn’t enough. I might turn down Sprint because they’re not available at my parent’s house, and T-Mobile because they’re not available at mine. That leaves me 2 choices. If Sprint and T-Mobile combine I have 3. But of course some people will go from 4 to 3 viable providers.

Anonymous Coward says:

Re: Re: Re:2 Sprint and T Mobile Merger

Or you could roam, use wifi … if no coverage then smokesignals I guess.

If roaming were a substitute, providers wouldn’t be publishing coverage maps and competing on that basis. In fact, they may cancel your service for excessive roaming.

With wifi and smoke signals we wouldn’t have to give them any money, which would be nice, but then we also wouldn’t have to care whether there’s any competition.

Anonymous Coward says:

Re: Sprint and T Mobile Merger

The problem is Sprint uses CDMA and T-Mobile and everyone else uses GSM. So your Sprint phone wouldn’t work on T-Mobiles Network, and T-Mobile phones wouldn’t work on Sprints Network!!!

So, NOPE, doesn’t help. T-Mobile on the other hand just acquired a bunch of new bandwidth. It’s going to take time before it spreads over the country and phones support it.

Less competition means higher prices and worse services. Look at all the things T-Mobile has done in the last few years which forced AT&T and Verizon to do similar things.
30,000 jobs lost, well that happens. Effecting millions of American’s with higher prices and worse service because of less competition is a fact!

Anonymous Coward says:

Re: Re:

The problem is that the conditions for 1982 are no longer present. The FCC already started under the idea of regulating telecom as natural monopolies which helped create that monopoly.

But proper enforcement of Anti-Monopoly & Anti-Trust law by the FTC would have stopped this madness a long time ago. The problem is that it is not profitable for government to enforce laws the benefit the consumers too much.

ThatDevilTech (profile) says:

What's the tipping point?

The government doesn’t give a damn about the consumer. They only care about where their next bribe is coming from. What’s going to be the tipping point for someone to stand up and say ENOUGH of this megamerger crap? I like the idea of limiting the # of subscribers, allowing multiple companies access to the last mile and limiting or even eliminating the fees, usage caps and overage charges. But, who is going to stand up and scream loud enough and kick the crap out of the lobbyists? The government is in the pockets of all of them. It’s not going to happen overnight, hell it may never happen given how much the companies own the legislatures at all levels, from the city to Congress.

Anonymous Coward says:

Re: What's the tipping point?

There is an entire underbelly to this. You must first get people to pay attention to it, they won’t.

Then you have to get them to stop being led around by their noses according to political party, and they won’t be stopping that either.

Just sit back and enjoy the ride, your fellow citizens do not give a damn and will get very pissed off and call you names if you even dare to question their political loyalties or point out one of their hypocrisies. And by all means do not tell them that they are responsible for anything the folks they VOTED IN did. They will just say that you are victim blaming.

Government changes when its citizenry changes, and as long as the citizenry sees no fault in itself… no changes are going to occur.

Victims my ass….

SirWired (profile) says:

Meh; I'm not against this one.

Sprint is in the death-spiral; they don’t have enough subscribers to pay for the capital costs of a properly-provisioned nationwide network, and certainly don’t have the funds to make any transition to 5G when those standards stabilize.

Making TMo stronger is a better choice for competition than leaving noncompetitive Sprint struggling until Softbank gets tired of dumping money into it.

MyNameHere says:

Job Losses? Think of all the buggy whip makers!

Karl, you once again manage to take an angle that goes completely against the Techdirt universe. It’s shocking that Mike hasn’t taken you out behind the virtual woodshed to put you out of your mistery, except of course you know the secret 10 self-links per story rule.

Seriously though…

Mergers (no matter the industry) almost always lead to job losses. Mergers generally work financially because there are duplication in the efforts of the companies when they are apart that would be eliminated when they are together. That means everything from facilities and product lines to staff and benefits. It’s the very nature of the game.

Further, mergers are generally the end result of an open business market. Monopoly or near monopoly players are generally considered the natural result of competition. When a company can no longer easily grow by taking market share from competitors at a reasonable price, it may be more financially sound to take over the competitor.

Finally, consider this: Who pays for the current jobs? Consumers. If you keep a bunch of people working that are effectively redundant, someone has to pay for them. Your cell phone bill pays for them, plain and simple. Competition has it’s benefits (naturally) but massive duplication of effort comes at a cost as well.

Mergers are unavoidable – regulation unnaturally may keep them from happening, but it’s not natural.

Why not write some positive stuff? Look for upstart companies offering new products in the communication market. They are the future competitors and future monopoly players.

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