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T-Mobile and Sprint are on hold — but likely not for long

Jon Talton, The Seattle Times on

Published in Business News

In April, Sprint CEO Michel Combes essentially threatened regulators that unless the merger between his company and T-Mobile is approved, job cuts would follow. These would include layoffs at Sprint's headquarters in suburban Kansas City.

No, not employment reductions that would be the inevitable result of the combination, but cuts because the company might be forced to remain free-standing. Methinks Combes is more concerned with the hefty golden parachute he would receive from the merger rather than Sprint employees or customers.

This is the event horizon for corporate deal making, the logic from which no job creation will escape. The gravitational pull of greed and power is too much.

Of course, that's not how Combes framed it.

"Without the merger, the trajectory for Sprint will worsen and Sprint's prospects will be limited," he wrote to FCC Commissioner Geoffrey Starks. "Sprint will be forced to further reduce its operating expenses, which means more job reductions in Kansas City and throughout the company, and our future as a standalone company will be in jeopardy."

Not mentioned is what might have happened if Combes and his predecessors had been focused on building market share, serving customers and investing in innovation, rather than being obsessed with acquisitions and mergers.

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At least T-Mobile, headquartered in Bellevue, could walk and chew gum at the same time. In addition to trying to sell itself to AT&T or acquire Sprint, the company worked hard to grow its business, becoming the third largest wireless carrier after AT&T and Verizon, with 80 million customers. Sprint, by contrast, has about 50 million.

On Monday, the FCC's laissez-faire Chairman Ajit Pai recommended that the commission approve the $26.5 billion merger. But later the same day, the Justice Department appeared to balk, concerned that the deal would stifle competition. Minor concessions the carriers made, such as selling Sprint's Boost Mobile prepaid cell service, were reportedly not enough for the DOJ's antitrust arbiters.

With Trump and Republicans overseeing both entities, it's an interesting disagreement. Did T-Mobile's patronage of the D.C. hotel owned by President Donald Trump go for naught?

Otherwise, none of the economic negatives have changed since I wrote about this saga a year ago.

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