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At Least 20,000 US Jobs Could Be Lost From A Proposed Merger Of T-Mobile And Sprint


04/30/2018


At Least 20,000 US Jobs Could Be Lost From A Proposed Merger Of T-Mobile And Sprint
The number of major US wireless providers would be reduced to three after the combination of T-Mobile and Sprint. The two companies announced the merger on Sunday to form a single new company.
 
The venture will allow the companies to save money by merging networks and by closing stores and would be able to offer stronger competition to the larger AT&T and Verizon. The new company would also help in the purchasing of rights of the airwaves that would be needed for the faster “5G” service and also help in creating infrastructure. 5G service is expected to begin within the next few years.
 
The merger would reduce competition in the wireless sector and make prices high and result in losses of at least 20,000 jobs in the U.S., said the Communications Workers of America, a union for telecommunication workers.
 
The deal has estimated value of Sprint at about $59bn and the new entity at $146bn. 
 
Under the Obama administration, Sprint had to opt out of a takeover bid for T-Mobile about three years ago because of competition concerns by the U.S. regulators. Last October too, the companies were set to be merged but that effort also had to be abandoned.
 
If the Trump administration feels that a deal is a threat to national interest, it has not bene shy to block deals. The administration prevented a proposed takeover of Time Warner by AT&T on the basis that the deal would not be good for consumers. And national security was cited ot be the reasons for the Trump administration blocking a bid to take over American chip maker Qualcomm by its rival company - Singaporean chip maker Broadcom in March this year.
 
Analysts believe that it could be easier for the merger of Sprint and T-Mobile to pass the anti-competition scrutiny because for the first time since 2009, the wireless market was deemed to be “competitive” by the FCC in September last year.
 
Large debt and a series of annual losses for Sprint had put it under a lot of pressure and its owner – Japan’s Softbank had been seeking a de4al for the company for quite some time now. BTIG Research analyst Walter Piecyk said that following measures by the company to cut costs, it has made itself attractive for customers. However, the company is not in a strong position for providing quality service in the rural areas because it has not invested adequately and does not possess enough airwave rights.
 
On the other hand, customer addition has bene happening at T-Mobile for a number of years now. Following the blocking of an attempt to acquire it by AT&T in 2011 by the U.S. government, the company has undertaken changes by getting rid of the two-year contracts and got back its unlimited data plans. The resultant price wars has also reduced prices for consumers.
 
“T-Mobile does not need a merger with Sprint to succeed but Sprint might need one to survive,” Piecyk wrote in a research note.
 
(Source:www.theguardian.com)