updated 04:05 pm EDT, Thu September 1, 2011
Sprint says ATT claims of merger job growth false
Sprint went on the offensive Thursday and endorsed a study (below) challenging AT&T's claims that buying T-Mobile would create jobs. The 'independent' study, handled by UC Irvine Economics professor and Center for Economics and Public Policy director David Neumark, rejected the idea that the capital investments made by AT&T would lead to more jobs after a merger. Neumark claimed that too much of AT&T's argument centered on the $8 billion it would invest into the combined network, which depended mostly on the assumption that T-Mobile would spend less than that amount on its network.
The figures ignore what happens if T-Mobile has to lower its own capital expenditures, something the FCC had already been told would likely happen. If the net overall investment went down by $5 billion, the combined company could shed 34,000 to 60,000 jobs, the professor estimated.
Neumark went on to cite AT&T's traditional record with takeovers and mergers. The carrier would have lost 107,000 "job-years" compared to what would have happened with the firms being independent. Sprint jumped in to note that AT&T has told investors it would need to cut staff through "rationalizing operations" and eliminating redundant positions. Many, if not most, corporate mergers involve cutting jobs as there is invariably overlap.
AT&T in an expected response claimed it was a "woefully flawed" study that made bad assumptions, such as that T-Mobile would still invest at a similar rate with Deutsche Telekom handing over control to AT&T. It reiterated a promise earlier in the week that it would "bring back" 5,000 call center jobs and keep those that might otherwise have to go.
Both sides have motivations that skew the results. Sprint had commissioned the study, and much like similar strategies from Microsoft, may have framed the study for Neumark to guarantee that it gets the results it wants.
AT&T, however, has been making promises that have increasingly come under fire. It may have sabotaged its own chances after an accidentally unredacted FCC filing uncovered that it only needed $3.8 billion of its own money to reach 95 to 97 percent LTE coverage, not the $39 billion buyout of T-Mobile. The Department of Justice decided not to hold out for an FCC ruling and sued to block the merger as it believed the consequences of knocking out a major competitor trumped any claims AT&T made to clinch the takeover. [image via AFP]