T-Mobile and Sprint Merger Faces Legal Challenge by 9 State AGs
By Tim Sheehan
California joined eight other states Tuesday in filing a federal lawsuit to block a proposed merger between the third- and fourth-largest wireless phone companies, adding another hurdle to plans for a 1,000-job customer call center in Kingsburg.
The lawsuit against T-Mobile and Sprint was filed in New York by California Attorney General Xavier Becerra and the attorneys general of New York, Colorado, Connecticut, Maryland, Michigan, Mississippi, Virginia and Wisconsin and the District of Columbia. The lawsuit argues that the merger would create a company that become the largest wireless company in the U.S., leapfrogging past Verizon and AT&T, with the effect of "diminished competition, higher prices, and reduced quality and innovation."
"Sprint and T-Mobile are close competitors. Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for customers," the lawsuit states. "If consummated, the merger will eliminate the competition between Sprint and T-Mobile and will increase the ability of the remaining three (mobile network operators) to coordinate on pricing."
The lawsuit asks for the court to find that the proposed merger violates federal antitrust law and issue an injunction preventing T-Mobile and Sprint from completing the merger.
Even before the lawsuit, however, T-Mobile has been on a public-relations offensive to promote the merger and the jobs the company said will result. In April, T-Mobile and Sprint announced that the merged "New T-Mobile" would open a customer call center in Kingsburg that would employ 1,000 people at higher average salaries than found throughout Fresno County.
The combined company also anticipates opening two other new call centers in Overland Park, Kansas, where Sprint is headquartered, and in Henrietta, New York. Two existing call centers would be expanded if the merger is consummated.
But a spokesman for T-Mobile acknowledged last month that the new "customer experience centers" in Kingsburg, Kansas and New York would only materialize if the $26 billion merger is approved. The deal requires the approval of antitrust regulators from the U.S. Department of Justice; since radio licenses now owned by Sprint would be transferred in the merger, the Federal Communications Commission also has to sign off on the merger.
"The New T-Mobile CECs are contingent upon the merger being approved," a T-Mobile spokesman said in an email to The Bee last month. The email indicated that neither T-Mobile nor Sprint would move forward individually with the Kingsburg center or the others if the merger does not go through.
If the merger is ultimately approved this year, an economic report commissioned by T-Mobile indicated that the Kingsburg call center would open in 2022. Jobs at the center would offer average wages and benefits amounting to between $1,100 and $1,300 a week, with a total payroll including benefits of $56 million to $65 million per year.
Uncertainty over the fate of the merger in the Justice Department and the FCC already prompted T-Mobile and Sprint to announce in financial disclosures that the expected closing date for the deal was pushed back to late July. The companies had originally anticipated the merger to be completed in the first half of 2019.
T-Mobile and Sprint are the third- and fourth-largest national wireless carriers in the U.S., according to the Federal Communications Commission. In its quarterly earnings statement for the first quarter of 2019, T-Mobile reported that it had more than 81.3 million customers as of March 31, while Sprint indicated that it has nearly 55 million subscribers to its services.
(c)2019 The Fresno Bee (Fresno, Calif.)