Sprint/T-Mobile Approval Means Higher Prices, Huge Job Losses
A federal judge approved the $26 billion T-Mobile and Sprint merger, cutting the major wireless carriers from four to three. Here's what that means for prices, jobs, and your monthly bill.
1 The Merger Is Approved
BILLSHARK regrets to inform you that a federal judge approved the $26 billion merger of telecom giants T-Mobile and Sprint, thus bringing the number of major wireless carriers down from four to three.
U.S. District Judge Victor Marrero rejected the arguments brought by 12 states’ attorneys general seeking to halt the merger.
“There is no doubt that reducing the mobile market from four to three will be bad for consumers, bad for workers, and bad for innovation,” New York Attorney General Letitia James said in a statement following the ruling. “From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets.”
2 Brief Recap
In 2018, T-Mobile’s and Sprint’s boards approved the all-stock merger between the two companies, the third- and fourth-largest wireless carriers. The resulting merger hands the new entity—which will be known as New T-Mobile—more than 127 million customers, automatically making it the third-largest player in the game, after AT&T and Verizon.
Department of Justice (DOJ) approval was held up while anti-trust investigators tried to find a workaround to allow the merger to go through. Their solution: Require the two firms to sell some business elements to Dish Network, which is supposed to bring Dish onboard as a viable competitor to the Big Three. In return, Dish promised to provide new wireless service to 70 percent of the nation.
The DOJ remedy of forcing the two companies to divest various assets supposedly solved the problem of concentrated power by propping up Dish as a new fourth competitor in the market. Dish, which is already struggling to maintain customers, however, is not likely to surface as a major competitor to the Big Three, according to analysts.
3 The Losers
And the losers will be consumers and as many as 24,000 employees currently working in independent phone stores. As NBC News reported, part of the deal includes Sprint turning over its Boost Mobile operations to Dish, which casts doubt on the future of those 8,000 stores.
“Sprint has sold a number of its stores to independently owned stores, but they still own some of them,” explained Adam Wolf, president of the National Wireless Independent Dealer Association, which represents owners of phone stores. “When T-Mobile owns them, what do you do when you have a T-Mobile across the street?”
Of course, the companies claimed that they will create jobs in the wake of their merger. New T-Mobile promised an increase of 3,500 additional jobs the first year, with 11,000 more by 2024. But according to NBC, “Wall Street analysts believe the [job] cuts will be significant—and the two companies have themselves acknowledged that efficiencies could result in savings of $17 billion in operating costs.”
“Efficiencies” is corporate-speak for job elimination from combining such duplicative functions as management, administration, etc. The Communications Workers of America labor union agrees with the projection of 24,000 job losses in the independent stores, adding in a statement, “Another approximately 4,500 jobs would be eliminated due to duplicative functions at corporate headquarters in Overland Park, Kansas, and Bellevue, Washington.”
But don’t worry: Immediately following the judge’s ruling, Sprint’s stock soared a whopping 77 percent. So some folks will make out just fine.
4 How the Merger Will Affect You
As we reported last year, Sprint customers will gradually migrate to T-Mobile if they haven’t already. About half of Sprint’s phones already support both networks.
Observers believe that, in the short term, prices may see a slight dip as Verizon and AT&T move to blunt the novelty of the new T-Mobile. In the long run, however, the monolithic carriers will have little reason to cut prices or provide better service, given the lack of competition in the industry.
Because Sprint was the low-cost alternative to AT&T, Verizon, and T-Mobile, with starting plans half the cost available from the other three, analysts expect data plans to quickly jump across the board. Also look for unlimited plans to go the way of landlines, they predicted.
Two possible hurdles to the deal remain:
- It still requires the approval of the California Public Utilities Commission, and,
- New York Attorney General James said the states are considering an appeal.
BILLSHARK will keep you updated. Meanwhile, let us negotiate with your providers to lower your bills. Remember, our review is free; we charge nothing if we’re able to save you money.
