Sprint says AT&T merger would result in big job losses
A day after the Justice Department sued to block AT&T's $39 billion merger with T-Mobile, an industry catfight raged on over whether the merger would add thousands of jobs to the U.S. economy or subtract them.
From AT&T's perspective, the merger would create 96,000 jobs, many resulting from new investments in building its wireless network out to largely rural areas. If you don't believe AT&T, you can ask its main employee union, the Communications Workers of America, which commissioned a study that came to that favorable conclusion.
But now Sprint Nextel Corp. -- a major opponent of the merger -- is touting its own study that concludes the opposite. Not only will the merger fail to create those new jobs, it says, but it could also destroy many old ones -- as many as 60,000 of them, if some of its assumptions about AT&T's plans are correct.
"The merger may or may not have other benefits that have to be weighed against its potential costs," writes David Neumark, the director of the Center for Economics & Public Policy at UC Irvine and an author of the Sprint-commissioned study.
"But there is no basis for claiming that job creation is one of these benefits, and the direct effect of the merger is far more likely to be many thousands of lost jobs."
Neumark argued that merging with T-Mobile and assuming control of its thousands of cellular towers, would allow AT&T to reduce the amount of money it would spend building its own towers. AT&T has said the merger would allow it to save more than $10 billion in "avoided purchases and investments." That, Neumark argues, equals jobs that will go away.
AT&T and CWA, its union, immediately dismissed Neumark's research, with AT&T spokesperson Claudia Jones calling it "a woefully flawed study with no factual underpinnings."
AT&T has said in the past that it believes the merger would lead to an overall increase in jobs, but it has remained vague on where those positions would come from. Some would result from the new network's "job-creating ripple effects," the company told lawmakers in July. That could mean activity in rural areas where people can use the new wireless network to "enhance education and business-creation opportunities."
On Wednesday, the Justice Department said blocking the merger would "help protect jobs" by guarding the competitiveness of the wireless industry.
-- David Sarno
Photo: Workers make adjustments to a cellular telephone tower along the 405 Freeway in 2000. Credit: Brian Vander Brug / Los Angeles Times