T-Mobile’s push to merge with Sprint is facing government pushback from lawmakers.
Last week, freshman congresswoman Rashida Tlaib, D-Mich., sent a letter to Department of Justice antitrust head Makan Delrahim and Federal Communications Commission chairman Ajit Pai outlining her opposition to the $26 billion deal.
The letter, signed by 36 other Democrats, reiterated prior concerns voiced from critics of the deal about how the reduction of national wireless carriers from four to three will lead to higher prices. Tlaib’s note also said that the merger would “disproportionately hurt lower-income people and communities of color.”
T-Mobile operates the prepaid service Metro while Sprint runs the Boost and Virgin Mobile brands. Combined, the letter notes, the two companies have a “disproportionately high percentage of customers in communities of color.”
The letter also challenges the companies’ claims that they need each other to build nationwide 5G wireless networks and says that the combination of the two carriers will result in the loss of “30,000 jobs nationwide” due to “overlapping retail store closures” and “duplicative functions at corporate headquarters.”
Tlaib’s jobs figure comes from a Communications Workers of America (CWA) estimate in 2018. CWA is a union representing telecom workers, though it largely works with AT&T and Verizon employees and not those at T-Mobile or Sprint.
The CWA has long been fighting the merger, arguing in January that in New York, for example, that the deal would eliminate 1,705 jobs.
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T-Mobile, meanwhile, told the New York State Public Service Commission in a recent filing viewed by USA TODAY that the combined companies total number of employees will equal or exceed the total number of employees of Sprint and T-Mobile in New York at closing, as of two years following the merger.
At the close of its most recent fiscal year last March, Sprint said it employed roughly 30,000 people across its entire company.
“The Sprint and T-Mobile merger is a bad deal for the American people, especially for communities of color, low-income, and our working families,” Tlaib said in a press release accompanying the release of the letter.
The House Democrats’ letter follows separate letters sent by Senate Democrats last month to the Justice Department and FCC opposing the merger, according toThe Hill. Among those who have voiced opposition include 2020 presidential hopefuls Sens. Cory Booker, D-N.J., Kirsten Gillibrand, D-N.Y., Elizabeth Warren, D-Mass., and Amy Klobuchar, D-Minn. Sen. Bernie Sanders, I-Vt., also sent a letter.
While lawmakers can express their thoughts on prospective mergers, final approval ultimately falls on the FCC and Department of Justice.
While both Sprint and T-Mobile have announced plans to launch 5G independently of each other, the two have also argued that they need to combine to better deploy a 5G network on a nationwide level that would not only rival AT&T and Verizon but also serve as a traditional home broadband replacement.
T-Mobile and Sprint have also announced plans to build five new customer service centers across the country, which it says will create 5,600 additional jobs by 2021.
In a blog posting last month, T-Mobile CEO John Legere said that the new combined company will create “more than 12,000 new jobs” while also promising that the new company will add “at least 600” new retail stores.
“We appreciate that various members of Congress are interested in our merger,” T-Mobile said in a statement provided to USA TODAY when asked about the latest response from lawmakers to its merger. “We have been having open and detailed conversations about the benefits that the New T-Mobile will bring to consumers, and as a result, we are pleased that we already have a considerable amount of bipartisan support.”
“This is not your typical merger. The New T-Mobile will be a disruptor that aggressively challenges industries that are currently dominated by entrenched wireless and cable companies. When you look at the actual facts, data and analysis here, the merger will create jobs from day one, deliver more to customers of all incomes for less, reach rural America like never before and create a transformational nationwide 5G network that our two companies could not deliver alone.”
Sprint did not respond to a request for comment.
New report suggests potential DOJ concerns
A new report from the New York Post Tuesday added another possible wrinkle for the companies from the Department of Justice. Citing anonymous sources, the paper says that “prominent” staffers in the department are not pleased with parts of the companies’ deal, particularly T-Mobile’s pledge to not raise rates for three years if the merger is approved.
Citing two anonymous sources with “direct knowledge of his thinking,” the paper says that Department of Justice antitrust head Delrahim is “not impressed” with some of the details of the deal with the anonymous Justice Department officials noting how AT&T’s merger with Time Warner included a provision that AT&T would not blackout Turner content from rival cable companies for seven years after the deal closed.
Blackouts often happen when a cable or satellite company and a content provider are arguing over new rates to carry channels, with content providers then pulling channels from cable systems as a negotiating tactic.
AT&T’s $85-billion merger was finally completed last month after the Justice Department lost its appeal to the block the deal. The Justice Department previously sued to stop the deal, saying it would harm consumers and lead to higher TV rates.
It is currently unclear if the Justice Department will support the T-Mobile/Sprint deal or sue to block it similar to the AT&T merger. It is also unclear what the current thoughts of new attorney general William Barr are.
Barr previously served on Time Warner’s board and was general counsel and executive vice president at Verizon from 2000 to 2008.
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Barr has stock options in AT&T, a T-Mobile and Sprint rival, worth between $250,001 and $500,000 and dividends from AT&T worth between $500,001 and $1,000,000 according to a federal disclosure filing Barr signed last December.
The Department of Justice declined to comment when asked by USA TODAY about the report and Barr’s status.
Follow Eli Blumenthal on Twitter @eliblumenthal
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