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Will the T-Mobile, Sprint Merger Be Bad For Consumers? (vice.com)
On Sunday, T-Mobile and Sprint said that they have agreed to a $26.5 billion merger, creating a wireless giant to compete against industry leaders AT&T and Verizon. While a new website has been set up by the companies to help quell consumers' and regulators' fears by promising new jobs, improved broadband service, and increased competition, Motherboard's Karl Bode cites previous telecommunications mergers and Wall Street analysts to argue against the merger. From the report: The two companies attempted to merge in 2014 but had their efforts blocked by regulators who were justly worried about the deal's impact on overall competition. As Canadian wireless users can attest, the reduction of major wireless competitors from four to three only reduces the overall incentive for wireless carriers to engage in real price competition. That was the central point repeatedly made by regulators when they prohibited AT&T from gobbling up T-Mobile back in 2011. Even with four competitors, the industry frequently does its best to avoid genuine price competition, and industry watchers have noted that the overall volume of quality promotions for wireless consumers had been dropping so far in 2018. After regulators blocked the AT&T merger, T-Mobile wound up being a largely positive impact on the sector, forcing its competitors to adopt more consumer-friendly policies like eliminating long-term contracts and early termination fees. However, even with T-Mobile intact, price competition in the sector tends to be theatrical in nature.
Wall Street analysts are on record predicting that a Sprint, T-Mobile merger could result in the loss of up to 30,000 jobs -- potentially more than Sprint even currently employs. From retail operations to middle managers, there's an endless roster of human beings who, sooner or later, will be viewed as redundant. "If approved, this deal would especially hurt consumers seeking lower-cost wireless plans, as the combined company's plans would likely increase while competitors AT&T and Verizon would have even less incentive to lower prices," said Phillip Berenbroick, lawyer for the consumer advocacy group Public Knowledge. "Unless the merging parties can demonstrate clear competitive benefits we have yet to see, we will urge the Department of Justice and the FCC to reject this deal."
Wall Street analysts are on record predicting that a Sprint, T-Mobile merger could result in the loss of up to 30,000 jobs -- potentially more than Sprint even currently employs. From retail operations to middle managers, there's an endless roster of human beings who, sooner or later, will be viewed as redundant. "If approved, this deal would especially hurt consumers seeking lower-cost wireless plans, as the combined company's plans would likely increase while competitors AT&T and Verizon would have even less incentive to lower prices," said Phillip Berenbroick, lawyer for the consumer advocacy group Public Knowledge. "Unless the merging parties can demonstrate clear competitive benefits we have yet to see, we will urge the Department of Justice and the FCC to reject this deal."
If your phone bill isn't paying part of 30,000 salaries, that would be a considerable consumer advantage.
Considerable stock owner advantage sure, but less competition generally means higher prices, the savings won't end up in the consumer's pocket.
I stole this Sig
That doesn't explain why a merger is necessary. Sprint can die the horrible death it deserves and the remaining companies can pick up their customers or other assets. That necessarily implies that they will compete for those resources and that each company is less likely to acquire resources it doesn't need or want.
The likely alternative is that T-Mobile acquires Sprint at an inflated price along with a lot of assets that it has no real interest in, which could well capsize T-Mobile as well if they really screw the pooch on the valuation. History is rife with examples of mergers that left the acquiring company a bloated mess and much less capable. Let dysfunctional things die instead of co-opting them and hoping the cancer doesn't spread.
There's also a good chance it will larger but worse, and then there will be no more T-Mobile as it exists today. Are you sure it's worth the risk of losing the option that does not suck?
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
Nice idea... ...until someone decides that the resultant company is "too big to fail" and is therefore entitled to tens of billions of dollars of taxpayer money to keep them afloat after their executives demonstrate extreme incompetence while simultaneously collecting multi-million dollar compensation packages complete with golden parachutes.
No such thing as a free market.