In the end, the two companies couldn't agree on a host of details to make their deal work. Here's why that's good news.
The only losers in the collapse of the T-Mobile and Sprint merger are the players on Wall Street who wanted a quick buck and a few other billionaires, such as Sprint’s Chairman Masayoshi Son.
Otherwise, this development is good news for 5,500 T-Mobile headquarters workers in Bellevue, plus thousands more nationwide. The Communications Workers of America estimated that a merger would have killed 20,000 jobs. It’s impossible to know where the combined headquarters would have landed — Bellevue or suburban Kansas City — but the Puget Sound region retains an important corporate hub thanks to the talks’ collapse.
Customers get more choices, better competition and greater innovation. This deal was all about killing off a rival, narrowing choices, funneling more money to shareholders. Indeed, after the merger fell through, Sprint announced it would invest in improving its network. Serving customers, what a concept!
Neither company was the master of its fate. T-Mobile is controlled by Deutsche Telekom. Sprint, which was begun by the Southern Pacific Railroad (the name was an acronym for Southern Pacific Railroad Internal Network Telecommunications), was acquired by Son’s SoftBank Group in 2013. Ultimately, the deal unraveled over disagreements concerning control, valuation and antitrust concerns (the Obama administration blocked AT&T’s attempt to buy T-Mobile in 2011 and it wasn’t clear that even a Trump Justice Department would green-light the new merger).
One of the remarkable things about T-Mobile is that under CEO John Legere it vaulted ahead to become the No. 3 wireless provider despite the distraction of always being in play. Companies in that situation usually falter as management is focused on a deal.
Anti-competitive mergers have damaged a host of industries, from airlines and banking to media. Since the 1980s, they have denuded numerous cities and towns of their most important corporate assets, while leading to enormous losses of well-paying jobs. They are one driver of a less dynamic economy today.
Under the “anti-regulation” Trump administration, it’s too early to declare a turning point. But this is a victory for most people. Sadly, it’s also a sign that consolidation has tightened its grip so much that the “easiest” deals are already done. Easy for Wall Street. Hard for Main Street.
Today’s Econ Haiku:
Show the plutocrats at play
While you get pink slips