Employees Shouldn't Fear 'Scary' Sprint Synergies: T-Mobile CEO

Wireless employees may consider synergies to be “scary” but they shouldn’t fear any of those that may stem from a merger of the third- and fourth-largest carriers in the United States, T-Mobile Chief Executive Officer John Legere said at this month’s town hall meeting held for Sprint employees. The reason why big business consolidations are traditionally associated with job cuts is that they’re often done for the sole purpose of survival, which isn’t the case with T-Mobile and Sprint’s attempted tie-up, the industry veteran argued. The 60-year-old used the gathering as yet another opportunity to repeat his past claims about the move resulting in a net positive job growth in the future. T-Mobile and Sprint will employ 3,000 more people by the end of their first year together than what they planned to have on the books individually. By 2024, that number will grow to 11,000, assuming the merger attempt is approved in the first half of 2019, Mr. Legere said.

Former Sprint CEO — now Executive Chairman — Marcelo Claure reiterated the sentiment at the same event, asserting that the sole fact Deutsche Telekom will end up with a majority stake in the combined entity doesn’t mean all key positions will be given to T-Mobile. The Bolivian-American entrepreneur said jobs were Sprint’s key focus in merger negotiations with T-Mobile and are still being treated as a crucial component of the ongoing talks about the specifics of the actual consolidation.

Neither executive committed a lot of time toward answering questions on how many positions will still be cut from their operations regardless of the joint effort to ensure a net positive job growth in the long term. Mr. Legere only acknowledged that the current proposal will leave the firms with “two headquarters” and “two of some [other] things.” “There may not be two of everybody that wants to be here and do things” after the tie-up is completed, the T-Mobile chief acknowledged.

Background: The exact scope of the immediate job cuts likely to be caused by the tie-up is still unclear but the implications of the move are serious enough to have prompted official opposition from the largest industry union in the country - Communications Workers America. Last month, the organization asked all 50 Attorneys General to review the tie-up proposal, especially in regards to how it will affect the job market and potentially lead to higher prices for consumers. CWA’s own estimates suggest some 28,000 jobs might be eliminated as a result of the ordeal, which would amount to about a third of T-Mobile and Sprint’s combined workforce.

Neither party has yet provided a concrete plan on how exactly the aforementioned new positions are meant to be created within their first year of combined operations seeing how 31,000 such jobs would be required for Mr. Legere’s goal to be met. The CEO’s town hall appearance only mentioned “new Care positions” and a commitment to continued store buildouts, though many brick-and-mortar locations in the immediate vicinity of one another are likely to face the chopping block should the tie-up be approved.

T-Mobile and Sprint’s main pro-merger argument comes down to the fact that both are claiming they cannot compete with Verizon and AT&T in the 5G segment without joining forces, which some critics such as former FCC Chairman Tom Wheeler already labeled as a dubious statement seeing how both were saying the opposite as late as this year, promising nationwide 5G networks by 2020. T-Mobile also did a 180 on its FWA stance, going from claiming fixed wireless access is a gimmick pursued only by Verizon to promising to embrace it so long as its consolidation with Sprint is approved. The contradictory statements made as part of the two network operator’s push to have their merger greenlit prompted some criticism in the industry, with a number of consumer advocacy groups also expressing concerns about what the consolidation will mean for the prepaid segment seeing how the tie-up would eliminate the majority of the competition from that market, leaving all significant players under T-Mobile’s ownership.

The Bellevue, Washington-based telecom giant already attempted addressing the prepaid argument by rebranding MetroPCS into Metro by T-Mobile and introducing a number of more value-oriented plans, vowing to keep all of its prepaid brands untouched following the merger, with Sprint doing the same. Some industry watchers are still calling for some of those units such as Boost Mobile to be spun off into independent entities, though only the FCC or the DOJ can demand such concessions from the two network operators. Sprint and T-Mobile remain convinced their consolidation can be approved as-is, with no major divestments taking place, by mid-2019.

Impact: T-Mobile and Sprint's focus on jobs suggests the two companies' employees are still on the fence with the proposed tie-up and confirms the CWA's pushback against the move isn't baseless, at least in the management's mind. What's questionable is how that strategy will affect the public reception of the other part of the merger pitch - Mr. Legere argues the proposed consolidation isn't about survival and hence won't result in massive cost-cutting efforts but the two firms spent the better part of this year claiming they can't compete in the 5G space without combining, making their attempted merger precisely about survival.

Neither party has yet attempted to explain those two points in relation to one another but that's exactly what opponents of the deal are likely to focus on in their official complaints. Some already started doing so, with the likes of AT&T and Charter already protesting the merger, albeit in a discreet manner. As AT&T recently went through a lot of trouble to have its vertical merger with Time Warner approved, it's unsurprising the company will be displeased if one of its rivals is allowed to complete a horizontal consolidation without major issues. That state of affairs may complicate things for T-Mobile and Sprint, making their ambitious goal of having the tie-up approved by mid-2019 even less likely. In the meantime, neither firm will be making any major changes to its operations, so none of their existing employees should have their positions affected until next spring at the earliest.

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