If I were one of the 6,000 Sprint employees at the Sprint World Headquarters in Overland Park, I would run — not walk — to the nearest exit.
The proposed merger between Sprint and T-Mobile has “approved” written all over it. And if it does go through, the new headquarters of the merged company will be in Bellevue, Washington.
Overland Park would become a second headquarters, which probably means a small outpost. Nearly all of the 6,000 headquarters employees would almost certainly be redundant, and therefore eliminated, in the merged company we now know will be called just T-Mobile.
What I have just advised runs contrary to the views of many, including those shareholders of both telecommunications companies who believe the deal will be nixed, and who have dumped their stocks, sharply driving down the price of both.
The skeptics are forgetting this may be more about politics than it is about the possible price hikes to consumers. The same merger was killed several years ago under the Obama administration by the U.S. Department of Justice and the Federal Communications Commission.
This is now President Donald Trump’s show. One of Trump’s first acts as the new president was to name a Republican to chair the FCC for the first time in 12 years. The Justice Department is headed by U.S. Attorney General Jeff Sessions, a conservative Republican. Those appointed by Trump tend to be vehemently anti-regulation, pro-big business, and ambivalent, if not outright hostile, toward the little guy — the consumer.
The notable exception is the block of a proposed merger between AT&T and Time Warner. Some, including me, believe that much of the opposition to the merger was because Time Warner owns CNN, and CNN is Trump’s public enemy No. 1, spewing out “fake news” and haunting his presidency. This is a dandy way to get even.
It is precisely the antagonism toward that merger under Trump that offers the best argument for his administration letting the Sprint-T-Mobile merger go through. To reject two mega-mergers in a row would appear anti-business and pro-consumer. That is not the kind of legacy Trump would like to leave, nor is it a reputation that fits with everything else happening under his direct or indirect control. Just consider the headlines if the Justice Department and FCC blocked this merger: “Second mega-merger nixed under Trump.” How embarrassing for the president.
Trump knows reducing competition to just three wireless carriers — Verizon, AT&T and T-Mobile — from the four that exist today would almost certainly mean higher prices for consumers. Trump needs some major spin to get around that notion.
According to many experts quoted in The New York Times, Bloomberg and other media, the much larger merged company, with its expanded resources, could more quickly offer customers 5G service. This technological coup could beat the Chinese in a high-stakes competition for this advanced technology. Trump could make the case that customers of 5G service would zoom ahead with the next generation of super high-speed wireless communications. The United States absolutely is in a race — especially with the Chinese — to be first with 5G. It’s the kind of contest Trump likes to win.
Trump will have a second strategy to fall back on as well. This one is a fudge. He would likely claim this merger will create thousands of jobs. That may be technically true. A merged company would mean the hiring of thousands of low-paid workers in the stores. That’s because combining the two into a much larger company would probably attract more new customers than simply adding together the existing customers of the two separate carriers. Of course, those additional jobs would be at the expense of thousands of high-paying jobs that would disappear.
I can hear Trump’s very words: “This merger will be great for the consumer who will get tremendous technology, will create thousands of jobs and will be terrific for the country,” he’ll say. “Americans will leap to first place. And by beating the Chinese, we will take another big step toward making America great again!”