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AT & T, Sprint Tussle Over Job Claims

Thu, 09/01/2011 - 8:16am
Maisie Ramsay

AT&T's rivals continue to lob criticism at its merger with T-Mobile USA even after the Department of Justice moved to block the deal with a federal antitrust suit.

Sprint came out to highlight a new study today claiming to debunk estimates that AT&T's proposed takeover of T-Mobile would create 96,000 new jobs.

According to the study, conducted for Sprint by a top economics professor, the merger would actually eliminate tens of thousands of jobs.

"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," Spring government affairs executive Vonya McCann said in a statement.

The report was commissioned by Sprint and authored by David Neumark, professor of economics and director of the Center for Economics and Public Policy at the University of California at Irvine.

Neumark found that AT&T's estimates, based on a study from the Economic Policy Institute, ignored reduced capital expenditures that would have resulted from the deal.

AT&T has claimed that it would increase its capital investments by $8 billion if the merger was approved, and says that investment would in turn create new jobs.

However, Neumark's analysis showed that the $8 billion figure did not represent the net effect of the merger and ignored 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. By incorporating additional data, Neumark found that AT&T's net capital investments post-merger would fall by $5 billion, resulting in a loss of between 34,000 and 60,000 jobs.

"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. But this is just a gross figure," Neumark said in the study. "It is a glaring distortion of the effects of the merger to count only increased sources of investment in projecting employment effects, while ignoring sources of decreased investment."

AT&T spokesman Michael Balmoris called Sprint's analysis a "woefully flawed study with no factual underpinnings."

Balmoris said the study erroneously assumed T-Mobile would continue to invest at the same levels before its parent company cut off 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," Balmoris said in a statement, citing the additional jobs it said would be created by planned network investments.

AT&T's job claims have come under doubt because mergers typically result in layoffs as companies make cuts in redundant business operations, such as billing, human resources and customer care departments. AT&T's own pledge to investors to cut capital spending has added to skepticism about its claims.

Sprint's report comes two days after AT&T pledged to repatriate 5,000 outsourced call center jobs to the United States if regulators approve its merger with T-Mobile.

The operator also said that it would not lay off any of its own call center employees or those working at T-Mobile who are on the payroll when the merger closes.

AT&T's attempt to sweeten the deal came just one day before the DOJ moved to stop the transaction.

Public Knowledge Legal Director Harold Feld expressed skepticism about AT&T's latest promise, saying there was no guarantee the company would stick to its pledge if regulators approved the deal.

"If AT&T formally agreed to this as a condition of the merger, and then they didn't do it, what would happen? You can't take the merger back," Feld says.

Public Knowledge previously disputed AT&T's job claims with a study claiming the merger would result in a net loss of 20,000 jobs.

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