'Job Creating' Sprint T-Mobile Merger Triggers Estimated 6,000 Non-Covid Layoffs

from the empty-promises dept

Back when T-Mobile and Sprint were trying to gain regulatory approval for their $26 billion merger, executives repeatedly promised the deal would create jobs. Not just a few jobs, but oodles of jobs. Despite the fact that US telecom history indicates such deals almost always trigger mass layoffs, the media dutifully repeated T-Mobile and Sprint executive claims that the deal would create “more than 3,500 additional full-time U.S. employees in the first year and 11,000 more people by 2024.”

About that.

Before the ink on the deal was even dry, T-Mobile began shutting down its Metro prepaid business and laying off impacted employees. When asked about the conflicting promises, T-Mobile refused to respond to press inquiries. Now that shutdown has accelerated, with estimates that roughly 6,000 employees at the T-Mobile subsidiary have been laid off as the freshly-merged company closes unwanted prepaid retailers. T-Mobile says the move, which has nothing to do with COVID-19, is just them “optimizing their retail footprint.” Industry insiders aren’t amused:

“Peter Adderton, the founder of Boost Mobile in Australia and in the U.S. who has been a vocal advocate for the Boost brand and for dealers since the merger was first proposed, figures the latest closures affect about 6,000 people. He cited one dealer who said he has to close 95 stores, some as early as May 1.

In their arguments leading up to the merger finally getting approved, executives at both T-Mobile and Sprint argued that it would not lead to the kind of job losses that many opponents were predicting. They pledged to create jobs, not cut them.

?The whole thing is exactly how we called it, and no one is calling them out. It?s so disingenuous,? Adderton told Fierce, adding that it?s not because of COVID-19. Many retailers in other industries are closing stores during the crisis but plan to reopen once it?s safe to do so.”

None of this should be a surprise to anybody. Everybody from unions to Wall Street stock jocks had predicted the deal would trigger anywhere between 15,000 and 30,000 layoffs over time as redundant support, retail, and middle management positions were eliminated. It’s what always happens in major US telecom mergers. There is 40 years of very clear, hard data speaking to this point. Yet in a blog post last year (likely to be deleted by this time next year), T-Mobile CEO John Legere not only insisted layoffs would never happen, he effectively accused unions, experts, consumer groups, and a long line of economists of lying:

“This merger is all about creating new, high-quality, high-paying jobs, and the New T-Mobile will be jobs-positive from Day One and every day thereafter. That?s not just a promise. That?s not just a commitment. It?s a fact….These combined efforts will create nearly 5,600 new American customer care jobs by 2021. And New T-Mobile will employ 7,500+ more care professionals by 2024 than the standalone companies would have.”

That was never going to happen. Less competition and revolving door, captured regulators and a broken court system means there’s less than zero incentive for T-Mobile to do much of anything the company promised while it was wooing regulators. And of course such employment growth is even less likely to happen under a pandemic, which will provide “wonderful” cover for cuts that were going to happen anyway.

Having watched more telecom megadeals like this than I can count, what usually happens is the companies leave things generally alone for about a year to keep employees calm and make it seem like deal critics were being hyperbolic. Then, once the press and public is no longer paying attention (which never takes long), the hatchets come out and the downsizing begins. When the layoffs and reduced competition inevitably arrives, they’re either ignored or blamed on something else. In this case, inevitably, COVID-19.

In a few years, the regulators who approved the deal will have moved on to think tank, legal or lobbying positions at the same companies they “regulated.” The same press that over-hyped pre-merger promises won’t follow back up, because there’s no money in that kind of hindsight policy reporting or consumer advocacy. And executives like John Legere (who just quit T-Mobile after selling his $17.5 million NYC penthouse to Giorgio Armani) are dutifully rewarded, with the real world market and human cost of mindless merger mania quickly and intentionally forgotten.

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Companies: sprint, t-mobile

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Comments on “'Job Creating' Sprint T-Mobile Merger Triggers Estimated 6,000 Non-Covid Layoffs”

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Anonymous Anonymous Coward (profile) says:

It's still wait and see

I have only a little doubt that predictions of job losses will come to fruition, but this article is arguing apples and oranges. The shutdown of Metro was expected, the idea being that it would be replaced by the Dish network that is still pie in the sky.
The jobs promised by Legere are customer care postilions for the new merged entity. Those are theoretically still in the future, and predicated upon wishful thinking about the new merged entities share of the market.

Of course those positions would only be needed if the new merged entity grows spectacularly, and given the history of competition between US telecom’s there is little evidence that the new merged entity will be able to grow spectacularly. What could they offer, a better network, lower prices, better customer service? Those have either been tried or will need significant investment and much time, so there is no expectation that one of those will be the boon. Therein lies the doubt, and the job losses will come as the need to pay executive bonuses and service debt will drive the corporation to do what corporations do (see AT&T for examples).

That One Guy (profile) says:

Re: No, no it really is not

Thing is while part of his claims regarding jobs were related to more long-term jobs he was very clear that the employment rates would not be going down, despite the fact that they very much are. To the contrary he stated that it was a fact that new jobs would be opening up from day one, which is rather undercut by the loss of thousands unless he’s been hiring even more people in the meantime, so it’s a mistake to give him any sort of pass or even just not call him out for his lies given he was very clear in what he said, and it was very clearly not true.

"This merger is all about creating new, high-quality, high-paying jobs, and the New T-Mobile will be jobs-positive from Day One and every day thereafter. That’s not just a promise. That’s not just a commitment. It’s a fact.

Anonymous Coward says:

Re: It's still wait and see

and the New T-Mobile will be jobs-positive from Day One and every day thereafter. That’s not just a promise. That’s not just a commitment. It’s a fact.

That’s is true only if fact is synonymous with lie, which it often is when said by politicians and management when they desire something.

That One Guy (profile) says:

Technically true, the best kind of true

Mergers absolutely create jobs, if by that you mean a whole lot of people suddenly needing to find new jobs thanks to the inevitable post-merger culling, with any claims to the contrary not just a lie but an insult on top as it’s basically saying that the other person is stupid and/or corrupt enough that they are incapable of even basic pattern recognition regarding how previous mergers have impacted employment.

Anonymous Coward says:

and as usual the fuckers in positions of power, who were going to gain personally from the merger, in one way or another, gave the ‘go ahead’ and thousands, again, are losing their livelihood! not only should those in the companies who wanted this merger be taken to court for what amounts to using fraud to get what they wanted but those in the various regulatory bodies should be hauled in too!! no one gives a shit about the workers, as long as those at the top of the company trees, plus regulators and politicians get ‘amply rewarded!

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