T-Mobile Is Already Trying To Wiggle Out Of Its Sprint Merger Conditions

from the told-you-so dept

Is it too early to say “I told you so” yet?

Despite countless pre-merger promises that its $26 billion merger would create oodles of new jobs, T-Mobile laid off 6,000 employees at its Metro prepaid division before the ink was even dry. Another 200 Sprint employees were fired during a 6 minute conference call a few weeks ago. T-Mobile and Sprint quietly confirmed the layoffs had nothing to do with the pandemic.

Both the FCC and DOJ ignored all critical data and rubber stamped the deal, because that’s what feckless, revolving-door regulators do. The only real resistance T-Mobile saw to its competition and job-eroding deal was the California PUC, which set certain 5G deployment (T-Mobile had to deliver 5G connections of at least 300Mbps to 93 percent of California by the end of 2024) and job (T-Mobile had to hire 1,000 additional employees within three years in California) targets. Given T-Mobile told regulators repeatedly that the merger would dramatically expand 5G deployment and jobs by default, neither should have been a problem.

Yet less than three months from the deal’s closure and T-Mobile is already trying to wiggle out from underneath its obligations in California by claiming California regulators lack the authority to enforce them:

“The commission simply does not have the authority to require a wireless carrier to hire a particular number of employees in a given time period,” T-Mobile wrote. “The legislature has never granted it such authority and, prior to the issuance of the decision, the Commission has not attempted to impose such a mandate on any other communications provider in any context.” T-Mobile also said the condition is “particularly burdensome and unjustified in light of the current COVID-19 crisis.”

California state law makes in clear the CPUC has the authority to determine whether or not a merger “maintains or improves” service quality for consumers, and “the quality of management of the resulting public utility doing business in the state.” Said law also mandates that mergers much be “beneficial on an overall basis to state and local economies,” and be “fair and reasonable to affected public utility employees, including both union and nonunion employees.” Telecom megadeals routinely fail that test, but, courtesy of a corrupted Congress, we simply adore rubber stamping them anyway.

Meanwhile, COVID-19 creates the perfect cover for T-Mobile to dodge its already flimsy deal conditions, even if the 6,200 employees who have already lost their jobs were laid off due to the merger, not the pandemic. And in April of last year, former T-Mobile CEO John Legere insisted that the company would easily add 11,000 additional employees within three years of the deal’s closing:

“Let me be really clear on this increasingly important topic. 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 in stark contrast to not only telecom history (such consolidation always causes job losses in support and middle management), but unions, consumer groups, economists, and Wall Street analysts, who all made it very clear the deal could, over time, result not only in upwards of 20,000 lost jobs, but lower pay across the sector overall. That’s before you get to the fact that reducing overall competitors from four to three will almost certainly result in less price competition and higher prices.

The T-Mobile Sprint merger was always hot garbage. Countless experts made this clear. US telecom megamergers are routinely terrible for markets, consumers, and employees. It’s why everybody spends all day bitching about AT&T and Comcast. Yet time and time again, pre-merger promises by companies looking for regulatory approval are eagerly swallowed and parroted by regulators and the press, and conditions are applied to terrible deals that are either too flimsy to be useful, or simply aren’t enforced. US merger mania (especially in telecom) remains a purgatorial game of Charlie Brown and Lucy football, where we see the same outcome time and time again, but simply refuse to alter our behavior because, at least for executives and investors, the broken path forward is the more profitable one.

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Companies: sprint, t-mobile

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Comments on “T-Mobile Is Already Trying To Wiggle Out Of Its Sprint Merger Conditions”

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14 Comments
Anonymous Coward says:

Another benefit of the unofficial State Actor Relationship

The large telecoms get to screw over the public again and again as long as they play nice with the access to the backbones of their networks. Allowing unfettered spying on the citizens gives the companies free rein to lie about mergers, lie about speeds and even lie about unlimited services with nothing more than a wrist slap in the courts. Billions per year are stolen by these companies based on known lies and promises that are never expected to be fulfilled. We have paid for fiber to the home multiple times over in the extra fees and charges that have been allowed yet a large percentage of this country still lacks DSL speeds much less fiber speed access.

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That One Guy (profile) says:

Telling timing

Given I rather doubt the PUC brought up the merger conditions only after it was approved it’s rather telling that T-Mobile is only objecting now, as if the terms really were that problematic you’d think they would have objected as soon as they were brought up.

Unless of course they lied while the deal was still pending in order to get the PUC to drop any opposition I suppose, but as I can’t see a telecom company doing something that dishonest I’m sure there’s some other explanation…

Anonymous Coward says:

Re: Re:

But I’m betting there are ethnic, social and gender patterns.

There often are, but I can’t imagine why T-Mobile would conspire toward ethnic and sexual discrimination at the low levels. I’ll guess they don’t care about any of those workers, regardless of background. The discrimination patterns at higher levels, eg. the boardroom, are more likely to be "real", but even then I’d guess it’s more about "help out my buddies" than anything else.

Anonymous Coward says:

Re: Re: Re:

They don’t need to conspire, all the however many underlings in charge of picking out who to fire have their either overt or unexamined biases, and no one further up the chain is going to make sure their wasn’t bias in workforce reduction.

Of course, some of the bias is baked right in: They are shedding Metro, largely, which like Boost, tends to serve and employ certain populations more than others.

Anonymous Coward says:

Re: Re: Re: Re:

They are shedding Metro, largely, which like Boost, tends to serve and employ certain populations more than others.

I’m going to guess the populations we’re talking about are the less profitable ones, more importantly than any other factor. Of course, centuries of discrimination could be the root cause of certain populations having less money. Which just shows that you can give phone companies the goal of providing universal service, or of making as much money as possible, but you can’t have both. The USA chose "maximum profit" in the decades after the AT&T breakup.

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