Saturday, 30 May 2020

Sprint–T-Mobile merger lays off 6,000 workers after promising job creation

by Harry Baldock, Total Telecom
Thursday 07 May 20

The two operators promised the merger would buck the trend of mass layoffs that typically occur after such deals, but they seem unlikely to deliver on such promises

Back in February, the Sprint–T-Mobile merger was inching ever closer to becoming reality, having just been approved by a federal judge in the US.  The operators took this opportunity to reiterate how beneficial this merger would be for the American people, including promising to create new jobs. The first year was set to create 3…

Back in February, the Sprint–T-Mobile merger was inching ever closer to becoming reality, having just been approved by a federal judge in the US. 

The operators took this opportunity to reiterate how beneficial this merger would be for the American people, including promising to create new jobs. The first year was set to create 3,500 new jobs, they companies claimed, with 11,000 more expected by 2024.

However, little more than a month after the merger was concluded at the start of April and the cracks in the plan are already beginning to show.

T-Mobile began to shut down its Metro prepaid business almost immediately after finalising the contract, resulting in a number of layoffs. Now, T-Mobile is closing a second wave of Metro stores, resulting in a further 6,000 job losses.

T-Mobile have argued that this move has nothing to do with the coronavirus pandemic – which, in fact, could have provided them a handy excuse – but have rather positioned the closures as “optimising their retail footprint”. The company has not responded to those noting that this mass of job losses runs contrary to their pre-merger promises.

Large job losses are typically expected from mergers such as these, as resources are almost invariably consolidated at the cost of full time positions. Executives usually promise job creation, knowing full well that it is unlikely, and then quietly begin to slash jobs after the media attention on the merger has moved elsewhere, typically after a year or so. 

In this case, the job losses seem to be coming sooner rather than later. Analysts are predicting that the merger could ultimately make between 15,000 to 30,000 jobs redundant. 

That said, the closure of T-Mobile’s Metro was expected as part of this merger, leaving a gap that is expected to be filled by Dish’s mobile network in the future. If the new T-Mobile grows as rapidly as the two operators hope, there will certainly be some level of job creation, though whether this can outweigh the job losses suffered in the interim remains to be seen.

For now at least, T-Mobile CEO John Legere’s promise of the new T-Mobile being “jobs-positive from Day One and every day thereafter” has clearly been proven untrue.

 

Also in the news:
Virgin Media and O2 strike £31bn merger, shaking BT
AT&T gives Loon a big lift with connectivity partnership
Spain’s impressive FTTH coverage hits 80% of homes

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