When it rains, it pours for AT&T. One day after the Department of Justice moved to block its proposed $39 billion merger with T-Mobile USA, Sprint is hammering the carrier for claims the acquisition will wind up producing nearly 100,000 new U.S. jobs.
Sprint, which has been the biggest opponent to the AT&T-T-Mobile tie-up, commissioned a study by David Neumark, an economics professor and director of the Center for Economics and Public Policy at UC Irvine. Neumarks study says thousands of jobs will have to be eliminated because AT&T will want to lower its capital expenditures by $10 billion. The professor says AT&Ts claims based on an Economic Policy Institute (EPI) memo citing the merger would lead to net job creation is hogwash.
“EPI’s claim that the AT&T/T-Mobile merger would create jobs is completely unfounded,” Neumark says in his report. “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.”
In fact, using the EPIs analysis, Neumark believes the merger will result in job losses of between 34,000 and 60,000. While he acknowledges that new investment will be made in broadband network infrastructure and elsewhere, he says there will be diminished investment in other areas.
Specifically, AT&T claimed in a news release Wednesday that, upon closing the merger, it would bring back to the U.S. 5,000 call-center jobs that are currently outsourced to other countries. It further stated that the merger will not result in any job losses for U.S.-based wireless call center employees of T-Mobile USA or AT&T, who are on the payroll “ Those 5,000 are just a fraction of the 96,000 new U.S. jobs AT&T said would be created by an $8 billion investment after the merger closes.
The carrier said its announcement represents the biggest commitment by any American company to bring U.S. jobs home since the economic crisis started three years ago.
In a civil antitrust lawsuit filed Wednesday, the U.S. Department of Justice said consumers would face higher prices, fewer choices and lower-quality products if the wireless megamerger between AT&T and T-Mobile were allowed to go through. AT&T is the second-largest carrier behind only Verizon Wireless and T-Mobile is the fourth-largest.