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.