‘Most mergers do not create jobs.’ Sprint, T-Mobile tell Congress theirs is different

Executives from Sprint and T-Mobile Wednesday sought to persuade skeptical congressional Democrats that a proposed $26 billion merger won’t eliminate thousands of jobs or raise prices on consumers.

The deal is currently under review by the Federal Communications Commission and Congress has limited power to prevent it from going forward. But newly empowered House Democrats used Wednesday’s hearing to scrutinize assurances from the companies that workers will be held harmless and prices will not spike.

“I’ve seen a lot of mergers in this industry and others and it’s hard to think of one that didn’t result in people losing their jobs, prices going up and competition being stifled,” said Rep. Mike Doyle, D-Pennsylvania, who chairs the subcommittee on communications and technology for the House Energy and Commerce Committee.

The Communications Workers of America has warned that roughly 30,000 jobs could be endangered by a merger of the wireless giants.

Sprint employs 6,000 workers at its Overland Park headquarters campus.

Sprint’s executive chairman, Marcelo Claure, asserted that the merger would result in new white- and-blue-collar jobs by allowing the two companies to expand their coverage capacity eightfold.

“It is true that most mergers do not create jobs. This merger is the opposite. It’s a growth story,” Claure said.

T-Mobile president and CEO John Legere also promised that current employees at the two companies’ retail stores would be able to continue working for the new T-Mobile.

“Let me say this to every T-Mobile and Sprint employee working in stores today, each of you will be offered a job,” he said.

But Chris Shelton, president of the CWA, fumed moments later that Legere’s promise was “just bull” and pointed to the proximity of the companies’ current stores throughout the nation.

“You can see from the maps how Sprint and T-Mobile stores tend to be right next to each other,” Shelton said. “So if the companies merge why would they keep two neighboring stores open? Chances are they won’t.”

Rep. Billy Long, R-Missouri, asked Legere about the potential impact of a merger on employees of a customer service center in his hometown of Springfield.

Legere told Long that the company would expand existing call centers and plans to open “five new gigantic centers” throughout the country, which would add thousands of jobs.

Legere and Claure repeatedly argued that the current wireless is a duopoly in which AT&T and Verizon dominate the bulk of the market.

They framed the merger as a way to increase competition rather than shrink the overall industry by coupling the third and fourth-largest providers.

Democrats on the committee were largely skeptical of these arguments and expressed concern that the merger would increase prices on low-income customers.

However, Rep. Anna Eshoo, the California Democrat whose district includes Silicon Valley, said Sprint’s massive debt could place customers at risk. A spokeswoman for the company said Sprint’s net debt currently stands at $33 billion.

“Sprint’s debt, I think, is unsustainable… It really holds one back to say the least. Imagine if they go out of business, they go bankrupt, this outcome would clearly be worse for consumers,” Eshoo said.

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Bryan Lowry covers Kansas and Missouri politics as Washington correspondent for The Kansas City Star. He previously served as Kansas statehouse correspondent for The Wichita Eagle and as The Star’s lead political reporter. Lowry contributed to The Star’s investigation into government secrecy that was a finalist for The Pulitzer Prize.
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