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

Failures

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.

Filed Under: 5g, california, fcc, jobs, merger conditions, wireless
Companies: sprint, t-mobile