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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Filed Under: employees, mergers, synergies, workers
Companies: sprint, t-mobile

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  1. 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: 1-1Q2018.pdf

    That sound you hear is known as "flushing".

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