Mergers & Acquisitions

Mergers & Acquisitions

September 14, 2011

AT&T/ T-Mobile Merger will Cut Thousands of U.S. Jobs: Sprint Study

The AT&T (News - Alert) / T-Mobile deal will lead to reduction in American jobs as the company will lower its capital expenditures by $10 billion, according to a study by David Neumark, professor of Economics and director of the Center for Economics and Public Policy at the University of California at Irvine.  

The study commissioned by Sprint, a competitor of AT&T and T-Mobile, refutes claims made by AT&T that the merger would be a net job creator. Sprint (News - Alert) says the  AT&T's planned $10 billion cut in total capital expenditures, in addition to its own history as a job reducer, would result in thousands of job losses,

“EPI’s claim that the AT&T/T-Mobile (News - Alert) merger would create jobs is completely unfounded,” Neumark said in a statement. “It ignores potential reductions in capital expenditures that T-Mobile would have undertaken. Indeed, AT&T has told the federal government and its investors that the merger would lead to reduced capital expenditures – which by EPI’s own logic would lead to fewer jobs. And AT&T has acknowledged there would be other job reductions resulting from the merger.”

The EPI memorandum bases its job projection on AT&T’s claim that the merger would result in an increase in capital investments of $8 billion. The $8 billion investment is not an estimate of the net effect of the merger. It ignores the capital expenditures that would have been made by T-Mobile. Moreover, AT&T has been promising cuts in capital expenditures to Wall Street.

“This study shines light on false premise that AT&T is using to sell this damaging deal to regulators and the American public,” said Vonya McCann, senior vice president, Sprint Government Affairs. “The DOJ and FCC should not be fooled by additional false claims, and neither should the American public. This deal is bad for consumers, bad for competition, and bad for the economy.”

Recently, a survey by Left Right Research found that Verizon is the clear winner overall, with highest positive views and lowest negative views. Verizon (News - Alert) got more than twice as many positive as negative responses, Sprint & AT&T got twice as many negative responses as positive ones and with T-Mobile, the positive responses slightly outweighed the negative responses.

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Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Rich Steeves

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