Sprint/T-Mobile merger could lead to thousands of job losses, despite regulator promises

Sprint/T-Mobile merger could lead to thousands of job losses, despite regulator promises

The merger of T-Mobile and Sprint could lead to as many as 24,000 job losses in the retail sector, according to an industry group representing independent phone store owners.

The $26 billion deal, blocked last year by attorneys general from 12 states and Washington, D.C., because of antitrust concerns, was approved Tuesday by a New York judge. It still needs the approval of the California Public Utilities Commission.

As part of the deal, T-Mobile and Sprint have pledged to protect jobs, lower prices for consumers, and improve coverage and speeds. But, while both companies may be able to keep their promise not to trim any of their own staff, many phone stores are staffed independently — which could mean layoffs in the range of 24,000, said Adam Wolf, president of the National Wireless Independent Dealer Association, which represents owners of phone stores.

As part of the deal, Sprint will shed its Boost Mobile operations to satellite company Dish Network. Boost Mobile is a prepaid phone service popular with lower income households. Wolf told NBC News his chief concern was for the future of the 8,000 local Boost stores.

“What will happen to the stores and how long will it take?” said Wolf, adding that some of the wholesalers have already been shedding staff ahead of the merger. “Sprint has sold a number of its stores to independently owned stores, but they still own some of them. When T-Mobile owns them, what do you do when you have a T-Mobile across the street?”

T-Mobile has argued in front of regulators that it will be a job creator, not a killer.

“In year one, New T-Mobile will have more than 3,500 additional full-time US employees than the standalone companies would have had, and 11,000 more people by 2024,” the company said in a statement this week, adding that it has plans to build more than 600 new retail locations and five new "customer experience centers" that would create 12,000 more jobs.

However, not everyone is buying the idea that this merger will result in such employment opportunities. Wall Street analysts believe the cuts will be significant — and the two companies have themselves acknowledged that efficiencies could result in savings of $17 billion in operating costs.

“The enormous cost synergies made possible by the merger are the most important story here,” read one report from equity research company MoffettNathanson earlier this week.

“Approximately 24,000 jobs would be eliminated as a result of overlapping retail store closures at postpaid and prepaid (Boost and MetroPCS) locations,” the Communications Workers of America labor union said in a statement. "Another approximately 4,500 jobs would be eliminated due to duplicative functions at corporate headquarters in Overland Park, Kansas, and Bellevue, Washington."

“One of the key rationales for the merger is “efficiencies” which means getting rid of redundant stores and personnel. Even the trial judge mentioned that," Gigi Sohn, a former counselor Federal Communications Commission counselor, and now a fellow at Georgetown Law Institute, told NBC News. "I’ve never seen a merger that has resulted in more jobs, and the promises are unenforceable."