Union defends AT&T/T-Mobile merger

05 Sep 2011

Now I've seen everything. A union fights for a $39 billion merger. Coming to the defense of AT&T's pursuit of T-Mobile, the Communications Workers of America has taken issue with the Department of Justice's move to stop the deal.

The union argues that the merger could create as many as 96,000 jobs (yes, that right, almost 100k) in the US, where unemployment has been stuck above 9% for almost four years. But that huge number, if you read the fine print, is based on the flawed assumption that AT&T would invest $8 billion in capex (above and beyond what T-Mobile would have spent on capex without the merger), which is highly unlikely.

And since when have we ever seen an up-tick in hiring after a merger of huge firms? Judging from AT&T's merger history, substantial losses can be expected.

In a statement the union said: "In the US, where too many Americans, especially in rural areas, don't have access to the tools of internet technology, the DoJ is looking to block a plan to build out high-speed wireless access to 97% of the country."

Seems the union really cares about reducing the digital divide in the US as well as creating jobs. But behind the rhetoric its statement clearly shows the union's true motive is making sure T-Mobile employees have "a fair choice about union representation". You see, T-Mobile isn't a union shop and its "workers’ rights are routinely violated," the union claims. That certainly puts things in a different perspective.

AT&T, of course, truly cares about job creation, thus its offer just a week before the DoJ's lawsuit to bring 5,000 call center jobs back to the US if the merger went through. But why did it take more than four months for the company to offer such an enticement? With the battle over the deal still raging, it was a clear sop to the union and lawmakers who are desperate for an up-tick in the employment numbers.

But the simple fact is DoJ's move to block the merger has significant merit. According to Ovum's Jan Dawson, T-Mobile has acted as a disruptive competitor in the market, pioneering new service plans and devices and putting significant competitive pressure on the three largest operators. "There is no doubt it [the merger] also would have alleviated that competitive pressure."

Thumbail image from server side store: 

Joseph Waring



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