AT&T, T-Mobile Merger: Sprint Applauds DOJ, Refutes Jobs Claims

While AT&T and T-Mobile are rightly devastated that the U.S. Department of Justice (DOJ) has decided to file a lawsuit against their proposed merger; one phone company loves the decision.

Sprint Nextel Corporation saw its stock spike rise 7.89 percent or 0.28 cents per share after the news came out. The company also released a statement praising the DOJ over its decision on the proposed AT&T and T-Mobile merger.

The DOJ today delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T's proposed takeover of T-Mobile, the DOJ has put consumers' interests first. Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision - one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry, Vonya B. McCann, senior vice president of Government Affairs for Sprint, said in a statement.

The DOJ ruled that the AT&T-T-Mobile merger would hurt competition and result in increased prices, poorer quality services and fewer innovative products. This came after AT&T asserted it would be able to create 5,000 jobs from the merger.

In a study it commissioned, Sprint reaffirmed the beliefs of the DOJ and said AT&T's assertion was a flat out lie. The study says as a combined AT&T-T-Mobile would lower its capital expenditures by $10 billion, the company would be forced to eliminate thousands of jobs.

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, David Neumark, professor of Economics and director of the Center for Economics and Public Policy at the University of California at Irvine said in a statement.

According to the Sprint favored study, AT&T's remarks ignore the net effect of the merger. AT&T said the merger would result in an $8 billion increase in capital expenditures. However, AT&T is ignoring T-Mobile's capital expenditures ($3.4 billion) and AT&T's promise to cut capital expenditures.

The study says if AT&T cuts capital expenditure by $5 billion, it would result in a job loss of 34,000 to 60,000. Neumark also looks at AT&T's history of eliminating jobs following mergers.

Since 2002, AT&T has eliminated over 107,000 jobs relative to the growth in employment that would have occurred from the acquisitions that occurred during that time period. This evidence is consistent with AT&T's past mergers generating job loss, he said.

AT&T is naturally not a fan of the study. The company says it is woefully flawed with no factual underpinnings.

For example, it ridiculously assumes T-Mobile will continue to spend and invest at the same levels it did before its parent company, Deutsche Telekom, cut off its funding. We have made firm commitments on jobs, including bringing back 5,000 jobs to the U.S. from overseas, and that wireless call center employees on the payroll at closing will not lose their jobs, a spokesperson said in a statement.

Follow Gabriel Perna on Twitter at @GabrielSPerna