Predictions

by Karl Bode


Filed Under:
employees, mergers, synergies, workers

Companies:
sprint, t-mobile



Study Says Wireless Retail Workers Could Make Up To 7% Less In Wake Of Sprint, T-Mobile Merger

from the meet-the-new-boss dept

As T-Mobile and Sprint attempt to merge (once again), their executives are making all the usual claims ahead of such mergers: that the mega deal will create immeasurable "synergies", that the reduction of major U.S. wireless competitors from four to three will somehow create competition, that the deal will somehow make it easier for them to deploy next-gen "5G" networks, and that the deal will somehow magically create oodles of new jobs.

Of course if you've studied telecom history or been a part of one of these deals as a mid or low level employee, you probably know these claims are almost always bullshit. Usually what happens is nothing changes for a year, as the buyer tries to sooth employee and media concerns about people being shitcanned. Not long after that, most of the redundant positions start to get eliminated, specifically, in a merger like this one, in middle management, support, and retail. T-Mobile CEO John Legere has repeatedly tried to claim the exact opposite, insisting to anybody who'll listen that this time is sure to be different:

Of course if you were to pay attention to Wall Street analysts, you'd note they predict that T-Mobile and Sprint could shed anywhere between 10,000 to 30,000 jobs lost (the latter more than Sprint even employs) in the wake of the deal. Retail positions in particular will prove particularly hard hit, according to analysts:

" 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.

There's a reason that this deal (and AT&T's attempted acquisition of T-Mobile) have been routinely blocked by regulators. Because mindless consolidation in telecom almost always ends badly for anybody by higher level executives and large investors. A new study by the Economic Policy Institute this week highlighted how the deal is also likely to drive down wages in the wireless sector as a whole (including at AT&T and Verizon) by as much as 7 percent thanks to consolidation and increased monopsony power:

"We predict that the merger of Sprint and T-Mobile would reduce labor market competition and therefore reduce earnings in the labor markets where the combined company hires workers to staff its retail stores. To do that, we employ earnings-concentration estimates from three recent studies, which use distinct data sets and specifications to estimate a negative relationship. Moreover, there is reason to believe this market, like most labor markets, is already monopsonized, and hence a profit-maximizing employer would be expected to use its increased monopsony power to reduce wages and worker benefits post-merger."

You'd think that Americans would be steeled to these kinds of hollow megamerger promises given our rich history of them. But for some reason we never learn. Claims of synergies and job growth are always generally parroted obediently by a press that doesn't want to criticize said companies for fear of losing access and potential scoops. So what you wind up getting is a sort of real world game of Charlie Brown (the public, competition) and Lucy (the merging companies' PR departments) football that never really ends well, dutifully stenographed by an obedient media unwilling to note how many times we've been down this road before.

That's likely going to be amplified this go round by consumers and reporters infatuated by John Legere's admittedly entertaining wise ass routine. While Legere has made a living off of T-Mobile's consumer-friendly branding (which you'll note doesn't extend to things like net neutrality), Legere's schtick is about to be tested as T-Mobile, thanks in large part due to the reduction of overall competitors from four to three, starts to behave more and more like the companies (AT&T and Verizon) Legere loves to ridicule.


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  • icon
    Gary (profile), 26 Dec 2018 @ 5:53am

    But...

    Because mindless consolidation in telecom almost always ends badly for anybody by higher level executives and large investors.

    Anybody but. :)

    reply to this | link to this | view in chronology ]

  • icon
    madasahatter (profile), 26 Dec 2018 @ 6:22am

    Mergers

    All mergers have I seen result in duplicated positions somewhere. It may not be customer facing but they are there. Also, very large mergers reduce the competition for talent significantly. The only counterbalance is a growing economy where talent is in short supply overall.

    reply to this | link to this | view in chronology ]

  • identicon
    Tin-Foil-Hat, 26 Dec 2018 @ 7:08am

    It doesn't matter

    Is there an election coming up? No? Then who cares. Keep thr bribes flowing.

    reply to this | link to this | view in chronology ]

  • icon
    PaulT (profile), 26 Dec 2018 @ 8:21am

    The fun fact is that he's probably not technically lying in the tweet because he qualifies it with "right now". He's not talking about long-term strategy, just that the raw numbers look positive before they start stripping redundant positions. The markets won't be looking past the next quarter to see the negative aspects.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Dec 2018 @ 8:54am

    But no one from manager and above will give a toss! Sane old story. Those doing the work get hit the hardest, lose the most. For everyone else, there's more money

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 26 Dec 2018 @ 8:58am

    Corporations misleading the public and regulators?!!?
    Say it isn't so!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Dec 2018 @ 9:33am

    "There's a reason that this deal (and AT&T's attempted acquisition of T-Mobile) have been routinely blocked by regulators."

    In 2008, the world was hit by American greed, as the financial world cause one hell of a recession taking advantage of suckers looking to make a quick dollar.

    Three US automakers: Ford, GM, and Chrysler were concerned about this because their sales of cars would be affected.

    Enter the US government (you know this can't be good): "No worries, folks! We'll bail you out!"

    Ford declined (though they did receive major subsidies while trying to tough it out), but GM and Chrysler sucked up those billions.

    Then promptly declared bankruptcy without paying any of it back. Clearly lessons taken from the Trump School of Running a Business.

    What's this got to do with the merger? Anytime the word "government" gets involved, it's going to end up bad for everyone.

    The merger *will* cost jobs. There's no question about that.

    Doing nothing will still cost those jobs. What this article fails to take into consideration is Sprint is failing. Its members are no longer in the volume to keep the company in the black and its losing cash faster than Spotify.

    A merger, years ago, could have at least been helpful. Instead, it was blocked over stupid rhetoric about "jobs" or "competition".

    There is no competition when the company folds, yet a merger is bad?

    Someone please explain the idiotic logic in this.

    Source of Sprint's revenue:
    http://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2018/Q1/c26e1abb-1846-49d4-9dc 1-1Q2018.pdf

    That sound you hear is known as "flushing".

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Dec 2018 @ 10:23am

      Re:

      "What about the automakers?" the AC said. "Surely one, admittedly large, instance of governmental involvement resulting in corporate misbehavior validates rejection of all governmental involvement ever!" the AC said. "Surely this is all government's fault and the corporations in question should bear no culpability for cutting and running with the money! The misbehavior of GM and Chrysler means we should clearly trust T-Mobile and Sprint to have acted in perfect good faith, as opposed to being a red flag to mistrust corporations in general!"

      Your argument would have been stronger without the reference to the auto-makers, since all you've done with that is opened yourself up to arguments such as the above. It's What-about-ism, and it helps no one - the bail-out of the automakers is an entire argument, debate, and research topic in and of itself.

      Also, news flash: It is possible for people, and therefore government, to do the right thing in one situation while also doing the wrong thing in another. Even if you come to an agreement that the government acted incorrectly in the bail-out, which is an argument I refuse to actually participate in, all that means is they acted incorrectly there, and that governments can act incorrectly (second news flash: this isn't news to anyone). It actually doesn't have any bearing on the merger.


      For the actual relevant topic, you've presented one quarter's report without putting it into a useful context by comparing it to other quarter's earnings. What are the figures for last quarter? Last fiscal year as a whole? Please provide the data to support Sprint's downward spiral - you've got a start, but not the whole. I'm going to need more, here, to convince me that the merger is the only thing that can or could have saved Sprint.

      reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 26 Dec 2018 @ 10:38am

      Re:

      You seem very confused. The merger would happen with or without government involvement. The job of the government here is regulation - that is, to decide whether to approve the merger and/or place restrictions as a result of it going ahead. Without their involvement, it would just go ahead anyway, but with lower chance of consumer protections being applied. If such things have failed here, you're saying that the government should be doing a more forceful job, not for them to get away from the issue - as, logically, the corporations will do whatever they want if they don't get involved, and they haven't been stopped here.

      You think you're arguing for the government to end their involvement, but you're actually arguing that they need to be more involved.

      Someone please explain the idiotic logic in this."

      Nothing idiotic, you just have to get off the "durr guvmint bad" train long enough to understand what is actually being done.

      In this case, a failed company's assets can be bought off, used by a new upstart or new players in the industry can use the new gap in the market to set up a new innovative competitor, or the remaining player may be forced to truly compete inn order to attract the new customers. A merger means that one player gets all the assets and customers, and there's no inventive for the new larger company to compete for the customers it inherited.

      It makes perfect sense when you start looking at facts and stop blaming government for the actions of corporations.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Dec 2018 @ 11:38am

    Are you two asleep at the wheel? Because...

    "The merger would happen with or without government involvement."

    Not true. 4 years ago, this merger should have been done. It was blocked by the government. Not officially, but with the "Go ahead and try it. We'll stop you."

    Those threats, by the way, are still here. Just read the article. The exact same excuses are being used to "block" the merger.

    The point I'm making is when there's a need to stop a business from failing, a bailout isn't always the correct response nor is blocking (or threatening to do so) a merger the government's responsibility.

    Especially for the sake of "jobs" which will be diminished anyway.

    The reason I used the automakers is relevant to the news GM is looking to leave the country, slashing those very jobs the failout simply extended, but did not prevent.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Dec 2018 @ 12:45pm

      Re:

      Again, your argument would be stronger without reference to the automakers, since as I stated last time, it is possible for the same entity to do the wrong thing in one instance, and the right thing in another. Regardless of whether the correct decision was made re: GM, that doesn't mean diddly when it comes to this merger.

      As regards this merger, as I said last time- you know what, let's just quote myself: "...you've presented one quarter's report without putting it into a useful context by comparing it to other quarter's earnings. What are the figures for last quarter? Last fiscal year as a whole? Please provide the data to support Sprint's downward spiral - you've got a start, but not the whole. I'm going to need more, here, to convince me that the merger is the only thing that can or could have saved Sprint."

      Hopefully you can give me something other than your current non-answer.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Dec 2018 @ 5:19pm

      Re:

      Chip, you could just skip to the part where you scream at us for not blocking the merger because regulations.

      You're going to be just as repetitive and tiresome either way.

      reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 27 Dec 2018 @ 12:01am

      Re:

      " Not officially, but with the "Go ahead and try it. We'll stop you.""

      Yeah, I know right - how dare they not only do their job but warn corporations that they would lose the case so that they don't waste time and money chasing after something that will fail. Far better to keep quiet and lead them through the law in a court setting while investors are demanding they do the impossible.

      "a bailout isn't always the correct response"

      It can be, although it wouldn't be the correct response here. It can certainly be argued that the need for a bailout (such as in cases where the entity is "too big to fail") reflects a failure in regulation leading up to that point, but it can be the correct response at certain times.

      "nor is blocking (or threatening to do so) a merger the government's responsibility."

      Erm, that's *exactly* their responsibility. If a merger would lead to consumer harm or reduced competition then it's the government's job to place the needs of the public first and either place conditions on the merger or block it.

      Again, you seem very confused.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonumous Coward, 26 Dec 2018 @ 1:31pm

    Spell check!

    Does no one use it anymore?

    reply to this | link to this | view in chronology ]

    • icon
      JoeCool (profile), 26 Dec 2018 @ 1:40pm

      Re: Spell check!

      Spell check only catches if a word is misspelled, not when the wrong word is used. "I him tuna Canada Fry pedestrian" has no misspelled words at all, so spell check wouldn't help. A grammar checker might also help, but I've never seen a grammar checker that helped more than it hurt.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Dec 2018 @ 12:11pm

    The 0.1% get richer. The rest gets pink slips.

    reply to this | link to this | view in chronology ]


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