Sprint Disputes AT&T Jobs Claims

As it made its case for being allowed to acquire and merge with T-Mobile, AT&T said the new combined company would help create jobs.

Not so says Sprint/Nextel, a competitor that would likely feel he biggest impact should the merger go through. Not surprisingly, Sprint issued a statement strongly backing the Justice Department's anti-trust suit, filed Wednesday to block the deal.

To emphasize the point, Sprint has released a study that it says debunks assertions made by AT&T that its proposed takeover of T-Mobile would be good for American jobs. Sprint says the study reveals that this acquisition would almost certainly lead to the elimination of thousands of American jobs as the company works to lower its capital expenditures by $10 billion.

Job claims groundless, researcher says

The study was conducted by David Neumark, professor of Economics and director of the Center for Economics and Public Policy at the University of California at Irvine. Neumark takes issue with claims made by AT&T, based on a memorandum by the Economic Policy Institute (EPI), that the merger would be a net job creator. The EPI analysis, Neumark maintains, is groundless.

"EPI’s claim that the AT&T/T-Mobile merger would create jobs is completely unfounded," Neumark said. "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.”

The problem, Neumark says, is the EPI memorandum bases its job projection on AT&T’s claim that the merger would result in an increase in capital investments of $8 billion. However, Neumark says that this $8 billion figure is not an estimate of the net effect of the merger. It ignores the capital expenditures that would otherwise have been made by T-Mobile, an average of nearly $3.4 billion in each of the last three years. Moreover, he says AT&T has been promising cuts in capital expenditures to Wall Street.

"There may be some new investment generated by the merger, and this may be reflected in the $8 billion figure that AT&T has cited in the press,” Neumark said. “But this is just a gross figure.”

Not a fan of the deal

Sprint has been an outspoken critic of the proposed deal from the beginning. If completed, the merger would make AT&T by far the largest wireless provider, with Verizon second. Sprint would be a distant third, and many industry analysts say, in a much weaker competitive position.

“This study shines definitive light on yet another false premise that AT&T is using to try to sell this damaging deal to regulators and the American public, and offers evidence that AT&T’s acquisition of T-Mobile could have a negative impact on the overall American economy,” said Vonya McCann, senior vice president, Sprint Government Affairs. “The DOJ and FCC should not be fooled by additional false claims, and neither should the American public. This deal is bad for consumers, bad for competition, and bad for the economy.”