Behold Ongoing Merger ‘Synergies’: T-Mobile Lays Off Another 5,000 Employees
from the merge-ALL-the-things! dept
Former T-Mobile CEO John Legere repeatedly promised in print that the Sprint merger would result in a massive surge in new jobs. In a rambling missive that took aim at deal critics predicting job losses, the charming, potty-mouthed ex-CEO proclaimed that critics were lying, and that the deal would be “job positive from day one” and every day thereafter.
Of course, that’s not how telecom industry consolidation actually works.
Within just a few years Sprint had already laid off around 9,500 employees at Sprint and T-Mobile. And now the company has announced that it’s laying off another 5,000 employees. As is routine for industry-cozy business news outlets like CNBC, the merger isn’t even mentioned in stories announcing the news. Instead, the layoffs are blamed on “adding more subscribers in a competitive market”:
“T-Mobile US said on Thursday it would reduce its workforce by about 7% by cutting 5,000 jobs in the United States as the wireless carrier grapples with rising costs related to adding more subscribers in a competitive market.”
CNBC is happy to help T-Mobile pretend that the layoffs are necessary due to the inflation bogeyman. In reality, these layoffs were an inevitable streamlining of redundancies caused by industry consolidation. For those playing along at home, that’s nearly 15,000 layoffs since Legere proclaimed the deal would be “job positive on day one and every day thereafter.”
Legere’s 2019 post still sits there like a turd on the T-Mobile website, showing you precisely how worried T-Mobile is about being held accountable for having lied to the press, public, and regulators.
Telecom experts, academics, and consumer groups like the EFF warned repeatedly that reducing the number of major competitors in wireless from four to three would result in higher prices and layoffs. They weren’t just playing predictive patty cake: in nearly every country where regulators approved such a deal, they observed that layoffs and price hikes were always quick to follow.
I’ve covered the telecom sector for twenty-plus years, and mindless consolidation and such megadeals always result in a less competitive market, higher prices, layoffs, and eventually a lower quality product. It’s simply not debatable, however much the industry and its various proxies like to pretend otherwise. As I wrote at The Verge in 2019 T-Mobile’s promises on this front were utterly meaningless.
In addition to the layoffs, the lion’s share of T-Mobile’s aggressive, consumer-friendly posturing has largely disappeared. The company’s “uncarrier” events have grown increasingly boring to the point where nobody much notices when they do or don’t occur. At the same time, T-Mobile has largely stopped competing seriously on price, also precisely as deal critics predicted.
You could also argue the merger distracted T-Mobile from more important things like securing its network, given the company has been hacked and seen consumer data compromised more than eight times in just the last five years.
If you recall, the Trump era “fix” for this reduced competition (in reality a hollow ploy to justify consolidation) was to try and cobble together a replacement fourth wireless carrier out of Dish Network. I also predicted that deal would be doomed, and my batting average is looking pretty good.
Mindless consolidation, “growth for growth’s sake,” and pointless megamergers may thrill short term Wall Street investors and overpaid executives, but are profoundly harmful. But instead of addressing that harm head on, press coverage (again, see: CNBC, CNN) often completely ignores the role of consolidation entirely, ensuring we learn nothing from experience as deal backers perpetually avoid accountability.
Filed Under: 5g, competition, consolidation, high speed internet, jobs, john legere, layoffs, mergers, synergies, wireless
Companies: sprint, t-mobile
Comments on “Behold Ongoing Merger ‘Synergies’: T-Mobile Lays Off Another 5,000 Employees”
They’re not pointless mergers, though; they create monopolies out of previously more-competitive markets.
If two companies got together and agreed to both raise their prices, that would be illegal price-fixing; but if one company pays to buy the other then they get to do the same thing but stay out of jail. So the merger is purposeful and working as intended.
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A) Sprint had been saying for years it needed to be bought out lest it go under. This was to pressure regulators to ignore the monopoly under the basis that we were losing a 4th major carrier anyway, therefore making the “merger + dish wireless network” plan seem like a reasonable attempt to retain a 4th carrier. The ‘unnecessary merger’ is in reference to these arguments.
B) Any claim that “this all makes sense if you ignore the stated intentions and just assume they are being self serving….” in reaction to this article isn’t being insightful. That’s the point the article is leading you to. People listen to the point more often when they ‘figure it out themselves’.
It’s like you can’t believe a thing they say.
Wow, look at that synergy!
We have the best synergies, no one makes better synergies than we do.
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I think that comment qualifies you to work on the Trump campaign.
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As one of Mr. Trump’s top advisors, I consider this statement gross and defamatory. It’s not nearly long enough.
Corporate Prenuptial
As part of a merger plan, companies should be required to provide a plan to split the up the companies and un-do the merger. In the event that the promises made during the acquisition were indeed lies, the mistake can be un-done, and things put back the way it was before.
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But the broken promises weren’t made to the other company, at least not to the execs who agreed to the sale. They were made to the workers and the general public, who don’t get to initiate divorce proceedings.
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These merger plans are typically overseen by government regulators, and the conditions and promises offered by the companies as enticements to gain approval from the government. Un-merger plans could be crafted to allow either those same regulators, or perhaps a competent court, to initiate the breakup in the event of deception.
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“These merger plans are typically overseen by government regulators”
I think they plan on this also, just takes a small contribution to a PAC, “charity”, or other such scam.
btw, the gullible act is a tad off
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If a “promise”, “guarantee”, or “commitment” comes with no stakes for whoever’s making it, then it hardly deserves the name. Without a defined penalty, it’s just talk.
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“As part of a merger plan, companies should be required to provide a plan to split the up the companies and un-do the merger. ”
I think they already do this, although their reasons for doing so are a bit different than yours. The eventual split up of the merged entities will occur in a timely fashion thus enabling the dividends and subsequent bonuses. I doubt many believe all that bullshit about their commitment to the community and their employees.
Funny (not really) how their tune changes when they realize that minimum wage workers (err .. I mean essential workers) are not an inexhaustible resource.
So each new subscriber adds costs? Why don’t they just limit the number of subscribers then, and limit their costs?
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Oh, idk .. sounds more like AOL over selling their capacity.
Like whining about getting a black-eye from an imaginary monster
“T-Mobile US said on Thursday it would reduce its workforce by about 7% by cutting 5,000 jobs in the United States as the wireless carrier grapples with rising costs related to adding more subscribers in a competitive market.”
Ah yes, because if there’s one thing that fosters and encourages a competitive market it’s less options for customers, that’s why they’re getting more customers not because there’s one less option in an already pathetically populated market.
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The other consideration is that in any given market there is a limited number of subscribers, and not everybody needs two or three phones. Where are the new subscribers to come from, other than by churn from other providers.
so, the question to ask is, who were those of authority in govt who not only encouraged the merger but actually voted for it? they are the ones who deserve to be named and shamed and voted into oblivion! it sure dont say much for ‘there’ll be more jobs created when the reality is thousands of jobs lost but none or very few from the upper management tree! as usual, the ones who get hit after all the lies and bullshit are the workers, the ones who actually do the work! i have to now ask, how long is it gonna be until the next bit of pleading takes place, begging to save jobs if another subsidy is handed out? and how quick will it be for the various senators etc to approve it only to see even more thousands of workers kicked in the ass??
This is nothing but crony capitalism/corruption on display, legalized through Citizens United. It was obvious to anybody that the point of this merger was to lessen competition, so that American consumers could be charged more.
That’s how our “free” market works.
“Mindless consolidation, “growth for growth’s sake,” and pointless megamergers may thrill short term Wall Street investors and overpaid executives, but are profoundly harmful.”
How dare you criticize the core or capitalism. You must be a communist, just like the other Karl – Marx!
(Or is that Harpo, I forget)
/s belongs ^^ up there ^^
Can’t you see, it’s the cost of adding all those new subscribers! They are just TOO successful, and so they have to cut 5,000 jobs to handle the onboarding cost for all these new subscribers they’re getting! The synergies of the latest merger had such an incredible ROI that they’re suffering under a tide of new customers. Can’t you see?
Who are they merging with?