T-Mobile staff start getting twitchy over Sprint merger

A letter has emerged from T-Mobile Workers United, with the union asking Deutsche Telekom executives to confirm jobs will be safe following the merger between T-Mobile US and Sprint.

According to Reuters, the union, representing around 500 employees from the telco, have seemingly decided to skip out T-Mobile US CEO John Legere and gone straight to group boss Tim Hoettges. The union is seeking assurances jobs will be safe should the merger between the two telcos survive legal challenges which are emerging.

Although there have been several assurances from Legere the merger will be a net creator of jobs, this is under the assumption growth can be achieved through the union. It might sound like a good headline, but reading into the statements, Legere is suggesting job creation will be down to synergies between the firms and a more assertive challenge to AT&T and Verizon.

However, the issue of business rationalisation has not been addressed head on. Whenever two large businesses are brought together through a merger, redundancies are unavoidable. This is a point which has not been addressed by the management teams, with senior managers simply pointing to the potential for growth.

Irrelevant as to whether there will be job creation through an aggressive network rollout or a taking the combined business into new, regional markets, there will be overlap between the two businesses. Not every lawyer, accountant or HR employee will need to be retained as the team will seek cost efficiencies during the integration process. The other thing you have to think about is the retail presence.

It won’t be in every location, but there will of course be hundreds of jobs at risk as the merged business seeks to rationalise its presence on the high street. There are going to be numerous locations where both Sprint and T-Mobile US have a physical store within minutes of each other; a choice will have to be made and job cuts will be evident. Being a net creator of jobs does not mean there will be no redundancies.

These staff are perfectly entitled to feel nervous, as the issue has not been directly addressed and any logical person would say there will be redundancies.

Oregon joins the anti-merger brigade to dampen T-Mobile/Sprint party

Oregon Attorney General Ellen Rosenblum has is the latest recruit for the coalition of lawyers aiming to block the merger between T-Mobile US and Sprint.

Almost immediately after FCC Chairman Ajit Pai offered his blessing for the union, Rosenblum hit back with the announcement. T-Mobile US and Sprint might be collecting the approvals from government agencies, but unless they can figure out how to appease the Attorney Generals, another headache looms large on the horizon.

“It’s important that Oregon join other states in opposing the Sprint-T-Mobile merger,” said Rosenblum. “If left unchallenged, the current plan will result in reduced access to affordable wireless service in Oregon — and higher prices. Neither is acceptable.

“Oregon’s addition to our lawsuit keeps our momentum going and ensures that there isn’t a single region of this country that doesn’t oppose this anticompetitive megamerger,” said New York Attorney General Letitia James. “We welcome Attorney General Rosenblum to our 16-member coalition that now includes states representing almost half of the U.S. population. We remain committed to blocking the merger of T-Mobile and Sprint because it would be bad for consumers, bad for workers, and bad for innovation.”

James is of course the ring-leader when it comes to this legal saga, though we suspect in crafting the position of consumer champion, the Attorney General of New York has higher political ambitions. Irrelevant to the end-game, James has proven to be very effective in collecting support for this lawsuit.

Rosenblum will now become the 16th member of an increasingly dangerous opponent for T-Mobile US and Sprint. One lawyer as an opponent is a daunting prospect, but 16 Attorney Generals and 16 antitrust department working against the progress of the merger is the stuff corporate nightmares are made of.

The full list of States now opposing the merger include: New York, California, Texas, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, Oregon, Virginia, Wisconsin, and the District of Columbia.

Having been filed with the District Court for New York on June 11, we suspect this might be somewhat of a prolonged battle. First, judges in New York will have to decide on the appropriateness of the merger, though you can almost guarantee whatever outcome will be appealed by the losing party. We suspect this is a see-sawing legal conflict which will carry on for months.

T-Mobile US and Sprint are nearing the finish line, but it is still well out of reach for the moment.

Pai gobbles up Sprint and T-Mobile US merger

After months of headaches and sleepless nights, the tides of favour seem to be turning for Sprint and T-Mobile US as the FCC chief gives his blessing for the union.

254 days into the 180 days the FCC gives itself to approve mergers, FCC Chairman Ajit Pai has officially confirmed his position. It is still not quite 100% guaranteed for the two telcos, however with Pai’s recommendation, the future is looking very rosier.

“After one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas,” Pai said in a statement.

“Moreover, with the conditions included in this draft Order, the merger will promote robust competition in mobile broadband, put critical mid-band spectrum to use, and bring new competition to the fixed broadband market.”

Suggesting this was a protracted and painful process might be one of the biggest understatements of the year. However, it might have been necessary considering the significant impact a merger of this scale could potential have on competition, diversification and network deployment across the US.

Above all else, the US is a monstrous market with an incredibly small number of nationwide telcos. This does of course offer economy of scale to improve investment capabilities, though there is a risk of regional monopolies due to the sheer size and geographical variance across the country. Proposed mergers which would take the number of national telcos from four to three has been extinguished in the past, though this one has passed almost every test.

The greenlight from the FCC Chairman is an important step, adding momentum to positive news from the Department of Justice in the last few weeks. At the end of July, the DoJ’s antitrust division gave the thumbs up, assuming Sprint’s prepaid brand Boost is divested, and Pai has made the same demands.

This is one concession which many expected, but we have major issue with. Dish will acquire the Boost brand, allowing it to make use of its horde of valuable spectrum, satisfying the demands, though will this be enough to maintain the current levels of competition, the objective of both the FCC and DoJ? We do not believe so.

Firstly, instead of having four established telcos in the US, consumers will now have to choose from three telcos and a newbie with zero experience of effectively running a mobile business and network. Dish does not have the competence, experience, infrastructure, processes, billing systems or supply chain to run a mobile business, and it will take years to build these elements to the degree expected.

Secondly, Dish is now an MVNO. It will be able to make use of the T-Mobile network, but the FCC and DoJ has replaced a functional MNO with an MVNO and expects no-one to notice the difference. Both of these agencies expect Dish to have its own network up-and-running in a few years, but this is another ridiculous ambition.

As mentioned in the first point, this is a company which is not practiced in the dark arts of mobile. The three remaining traditional players took decades to rollout their own networks, and they are still not genuine nationwide telcos (there are still network gaps across the country). How is Dish expected to create a nationwide, 4G and 5G, network across a country of 9.8 million km2, with an incredibly variety of different urban densities, geographical landscapes and economic societies.

If anyone thinks Dish is going to be a replacement which can maintain the current status quo, they are quite frankly fooling themselves.

What is worth noting is that this is not the end of the road for Sprint and T-Mobile. It might have secured the relevant regulatory approval, but now it will have to combat the various legal challenges.

Led by New York Attorney General Letitia James, a coalition of State Attorney Generals have filed a lawsuit to block the proposed merger. The lawyers are arguing the merger would harm competition, and it should be blocked to maintain the status quo. As it stands, with four separate MNOs challenging each other, prices and mobile experience is improving for the consumer; the lawyers are arguing that the situation is not broken, it is in fact improving, so why should the FCC and DoJ try to fix an imaginary problem?

Although the approval process from the DoJ and FCC might have been considered a significant problem, the telcos will not have to face legal heavyweights from more than a dozen States. Lawyers have a way of being very difficult when they want to be, so there might well be a few more twists and turns in this saga.

Justice Department green-lights T-Mobile US/Sprint merger

This might sound like the end of the road for one of the most protracted merger processes in recent memory, but T-Mobile US and Sprint will still have to deal with the backlog of legal challenges.

Although this is certainly a win for the duo, it did look ominous for quite a while and there are still a few legal challenges which will have to be dealt with. That said, this is a victory for T-Mobile US and Sprint, and a positive step-forward in the ambition to tackle the market dominance of AT&T and Verizon.

“With this merger and accompanying divestiture, we are expanding output significantly by ensuring that large amounts of currently unused or underused spectrum are made available to American consumers in the form of high quality 5G networks,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.

“Today’s settlement will provide Dish with the assets and transitional services required to become a facilities-based mobile network operator that can provide a full range of mobile wireless services nationwide.”

In short, without the divestment of Sprint’s prepaid mobile business to Dish, the deal would not have gone ahead. What this announcement now creates is a merger player with a larger horde of spectrum ready to tackle the 5G era and a fourth player which can start to make use of the spectrum licenses it has been quietly accumulating over the last few years.

For Dish, deadlines were fast approaching. After securing various spectrum licenses in the mid- and high-band frequencies, authorities were starting to get a bit irate with the lack of action. Spectrum is a valuable resource in the digital economy and a threat had been made; make use of the assets or hand them back. The acquisition of the boost brand should allow Dish to make a run at the mobile world. It will now have seven years to make use of the T-Mobile/Sprint network while it deploys its own.

Of course, while the end is in sight there are still another couple of headaches to deal with.

Several State Attorney Generals have aired their grievances and filed a lawsuit opposing the deal. The primary concern here was the reduction of national telcos from four to three, though it seems they are still not happy with concessions made to create a fourth player in Dish.

“The promises made by Dish and T-Mobile in this deal are the kinds of promises only robust competition can guarantee,” said New York Attorney General Letitia James, who has led the opposition.

“We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers, and innovation.”

The coalition of State Attorney Generals have reaffirmed their opposition to the merger, questioning whether the formation of a new MNO which has no experience in managing a mobile network is a suitable replacement for Sprint. Elsewhere, the Rural Wireless Association is also opposing the approval.

“Expecting Dish, a start-up mobile carrier in its infancy, to be able to compete as a fourth nationwide network, with divested wireless assets from Sprint and T-Mobile and Boost MVNO customers, and subject only to a handful of requirements that will expire, spells disaster for American consumers,” the RWA said in a statement.

“Three years is not nearly enough time to launch a facilities-based network. Clearly, DOJ has no idea what it takes to build a competitive nationwide mobile network.”

Gaining approval from the Department of Justice might have been one of the more difficult tasks on this quest, but this is not the end of the road for T-Mobile US and Sprint.

DoJ ready to greenlight Sprint/T-Mobile US merger – report

It has been one of the most protracted merger approval processes in recent memories, but source close to the US Department of Justice believe a positive decision is on the horizon for Sprint and T-Mobile US.

With Dish seemingly waiting in the wings to purchase Sprint’s prepaid brand Boost, the Department of Justice might well be on the verge of approving the $26 billion merger. According to the Wall Street Journal, a decision could be made public this week, though the budding duo would still have to face legal challenges from several State Attorney General’s before experiencing the merger euphoria.

After months of regulatory and antitrust objections to the deal, the Department of Justice might well be finally convinced. Aside from off-loading Boost to create a fourth nationwide player in the US, the duo would also have to commit to a three-year roadmap for 5G deployment as well as promising no tariff increases during the period.

Originally it did appear the Department of Justice did not share the enthusiasm as the FCC for the deal, though this report seemingly demonstrates somewhat of a U-turn. What is worth noting is all of these reports and rumours are nothing more than hearsay, though it will be welcome news from the T-Mobile US and Sprint executives who have been fighting against the tide for months.

That said, the deal with Dish appears to be central to this approval.

Earlier this week, it was suggested Dish had come to an agreement with Sprint to purchase the Boost brand for $5 billion. As part of the deal, Dish would become a connectivity customer of the newly merged business as it constructed its own network.

This would appear to be a very sensible report as Dish is under pressure to make use of the spectrum assets it has been collected over the last few years. Deadline day is quickly approaching for Dish to demonstrate it will make use of the licences otherwise it would be forced to hand back the valuable assets.

Hopefully the end of this saga is close as any further delays could start to have detrimental impacts on the 5G rollout plans of the two separate organizations. Both T-Mobile US and Sprint are keen to link up as this would create a more consolidated challenge to the leadership position of AT&T and Verizon in the mobile segment.

That said, objections from various parties have suggested reducing the number of nationwide MNOs from three to four would negatively impact competition, while others have also pointed to recent market trends.

In a joint lawsuit against the merger, several State Attorney Generals have pointed to decreasing prices for mobile contracts over the last few years, arguing that the system works. Some might suggest fixing something which isn’t broken is not the best path; if the current level of competition is benefitting the consumer, why should anyone consider changing it.

These reports are nothing more than rumour for the moment, and there are the lawsuits to consider, but it does appear this prolonged saga might be coming to a close sooner rather than later.

Sprint customers victim of another hack

Sprint is the latest telco to become the victim of cybercrime as an unknown number of customers have had their personal data eyed over by nefarious parties.

In a letter sent to customers, Sprint has suggested a huge amount of personal information has been exposed to the darker corners of the internet. The hackers gained access via the Samsung ‘add a line’ website, with the total number of impacted customers being unknown for the moment.

“On June 22, Sprint was informed of unauthorized access to your Sprint account using your account credentials via the Samsung.com ‘add a line’ website,” the letter states. “We take this matter, and all matters involving Sprint customer’s privacy, very seriously.”

An ‘add a line’ website is one utilised by third-parties, mainly device manufacturers, if customers want to add an additional phone line to an existing contract with a telco. Sprint offers this feature to customers who would like to add more individuals or devices to existing contracts.

This is of course not the first time Sprint customers have been the victim of the darker practices of the web, with the pre-paid brand Boost being compromised in March. Again, Sprint was not transparent with the severity of the breach, though in this instance a common technique called a credential stuffing attack was used.

Looking at the latest breach, exposure is quite severe. The hackers gained access to phone number, device type, device ID, monthly recurring charges, subscriber ID, account number, account creation date, upgrade eligibility, first and last name, billing address and add-on services.

Sprint has played down the risk in the letter, suggesting no other information ‘that could create a substantial risk of fraud or identity theft’ had been accessed. Sprint might want to play down the severity of the hack, but many will disagree with the laissez faire attitude.

“When attackers manage to hijack legitimate access rights, they can remain undetected for extended periods of time,” said Saryu Nayyar, CEO of cybersecurity firm, Gurucul.

“Many organisations don’t have the ability to identify subtle behavioural anomalies that are indicators of cyber threats. But with advanced machine learning algorithms it’s possible to spot behaviours that are outside the range of normal activities and intervene before the damage is done.”

Details are relatively thin on the ground right now, it is possible Sprint does not fully understand the severity of the breach at this point, though this is further evidence of security being an afterthought. Attitudes are changing for the better, though it is clear not enough firms are secure enough for today’s digitally-defined society.

Four more States stand in the way of Sprint/T-Mobile merger

With each week that passes, it seems to be getting more and more difficult for Sprint and T-Mobile US. Now, four State Attorney Generals have attempted to block the move.

Officially, the 180-day stop-clock which the FCC gives itself to approve any industry transactions has hit 202, and that doesn’t include the ‘pause’ it gave itself. And while the FCC might be taking things at a leisurely pace, it seems the Attorney General Offices around the US are building up a head-of-steam.

Two weeks ago, New York Attorney General Letitia James launched her campaign against the merger, questioning the logic and evidence used to promote the promises of increased competition, a faster 5G rollout or cheaper tariffs across the country. And she seems to have stuck a chord with counterparts in numerous other states.

Initially, James had the support of nine states, but with Hawaii, Massachusetts, Minnesota, and Nevada adding themselves to the suit, the total number of states as plaintiffs is now fourteen.

“The merger of T-Mobile and Sprint would stifle competition, cut jobs, and harm vulnerable consumers from across the country, so unity among the states will be key in defending our citizens against this power-hungry corporate union,” James said.

“We welcome the support from these four additional states, which should serve as a reminder that, all throughout the nation, we have much to lose if we do not take action to protect our people from this megamerger.”

And while this might look bad enough for Sprint and T-Mobile executives, it could get a lot worse. Over the last couple of weeks, letters have been submitted from an additional six Attorney Generals, telling the FCC investigations have begun to check the legality of the merger. Those states yet to declare are Pennsylvania (letter submitted June 5), Arizona (June 5), Delaware (June 18), Nebraska (June 18), Indiana (June 20) and Texas (June 21).

What is worth noting is that there does seem to be somewhat of a political split in in terms of objections here. All of the 14 Attorney Generals who have joined the suit so far are sitting in the Democrat camp. Of the six who are currently conducting investigations, two more are Democrat (Delaware and Pennsylvania) while four sit in the opposing Republican party (Texas, Indiana, Nebraska and Arizona).

Massachusetts Attorney General Maura Healey is objecting on the grounds of reduced competition, Minnesota AG Keith Ellison is attempting to protect jobs and lower prices, Hawaii’s AG Clare Connors didn’t say anything, and Nevada AG Aaron Ford simply said nothing of genuine value.

The most common theme with these objections seems to be focused on the idea of competition. Although T-Mobile and Sprint argue there is a need for more competition in the market, the AGs don’t seem to think so, or at least this isn’t the way to go about it. T-Mobile CEO John Legere might condemn the ‘duopoly’ which has formed at the head of the telco rankings, however the numbers do not lie.

Coverage is increasing, ARPU is coming down and the US should have all four of the major MNOs in the 5G world before the vast majority of other nations around the world. Things could be better in this market of course, but the trends seem to be heading in the right direction. This is a point which has been raised by the AGs; if it isn’t broken, don’t try and fix it.

Unfortunately for Sprint and T-Mobile, the argument of decreasing the number of telcos to increase competition flies in the face of logic, especially when you are removing the two cheapest options from the market. Of course, telecommunications is a capital-intensive segment to operate in, scale is very important, as is access to more valuable spectrum. But, the general consensus in the telco world is more providers is a better approach not less.

There will of course be incredibly loud voices on both sides of the argument, but logic lies with the AGs here. This is not to say the FCC will agree, but overarching trends argue against the need for Sprint and T-Mobile to merge.

Dish said to be close to buying Boost from Sprint

The disposal of assets required to sugar the pill of the T-Mobile/Sprint merger looks likely to be completed by US cableco Dish.

The latest goss comes from Bloomberg, which has been chatting to people who reckon they know what they’re talking about. These mysterious oracles say Dish is ready to drop $6 billion on prepaid operator brand Boost as well as a bunch of other unspecified stuff.

Since Boost has been valued at around $3 billion that’s quite a lot of unaccounted for expenditure. Since US regulators would ideally like a new national operator to be created before it will allow two of them to marge, this probably means some spectrum and whatever else Dish needs to become a viable MNO.

Apparently the WSJ had written a similar story last week so these telecoms Deep Throats are being nice and busy. Presumably they’re affiliated to the interested parties in some way and are floating trial balloons to see gauge broader sentiment on such a deal. None of the share prices of the companies concerned did much in response to the revelations.

Light Reading has reported on commentary from an Analyst who doesn’t think this is a great idea. He notes that it looks like a lose/lose since it takes spectrum away from TMUS/Sprint and cash away from Dish, in both cases depriving them of commodities they’re already short of. But big M&A usually ends up being about the egos of the big shots involved and if all those concerned fancy the idea they’ll probably go ahead regardless.

New York rages against T-Mobile/Sprint merger

Things are already looking dicey for the proposed merger between T-Mobile US and Sprint, and then New York’s Attorney General wades into the saga with scathing opinions.

“This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent,” said Attorney General Letitia James.

Support for the merger is pretty rare nowadays, though James and California Attorney General Xavier Becerra have filed a multi-State lawsuit to add more fuel to the flames. In total, ten States have been included in the lawsuit, compounding the headaches induced by an already prolonged approval process.

The omens are not looking particularly positive for T-Mobile US and Sprint.

“When it comes to corporate power, bigger isn’t always better,” said James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country.

“That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

T-Mobile US and Sprint are promising a cheaper and faster service, as well as a challenge to the dominance of AT&T and Verizon, but this isn’t enough to convince the legal heavyweights. It’s the same argument which is evident throughout the world of mergers and acquisitions; four to three does not encourage optimism.

Perhaps the most damning argument against the merger is market trends over the last decade. According to the US Labor Department, the average cost of mobile service has fallen by roughly 28% over the last decade, while mobile data consumption has grown rapidly. T-Mobile US and Sprint might argue a merger is better in the long-run for competition, but there is an old saying; if it isn’t broken, don’t fix it.

With four telcos competing for valuable post-paid subscriptions, the consumer does appear to be winning. Tariffs are expensive in the US, though they are becoming cheaper. Another interesting aspect to the lawsuit points to some skulduggery from the duo.

The Attorneys General’s investigation into the merger found that many of the claimed benefits were unverifiable and could only be delivered years into the future, if ever. Specifically, the AG’s are referring to the lightening speeds promised and the ease at which the duo believes a 5G network can be rolled out nationwide. This isn’t necessarily stating it is not possible, just that the claim is not supported by evidence.

For a decision which is likely going to be based on evidence provided, this is a very simple, but powerful argument for blocking the merger.