Why Sprint and T-Mo­bile’s merger means so much to Kings­burg

The Fresno Bee (Sunday) - - Front Page - BY TIM SHEE­HAN tshee­[email protected]­nobee.com

A de­ci­sion Fri­day by fed­eral an­titrust reg­u­la­tors ap­prov­ing the pro­posed merger be­tween wire­less com­pa­nies TMo­bile and Sprint re­moves a ma­jor obstacle to prospects for hun­dreds of jobs in Kings­burg.

The U.S. De­part­ment of Jus­tice an­nounced that it, along with the at­tor­neys gen­eral of Ne­braska, Kansas, Ohio, Ok­la­homa and South Dakota, reached a set­tle­ment with the two com­pa­nies — con­di­tioned on Sprint sell­ing off its pre­paid cellular busi­ness and some of its wire­less spec­trum rights to satel­lite TV provider DISH.

Ear­lier this year, TMo­bile and Sprint de­clared their in­ten­tion to build a new cus­tomer call cen­ter that would bring about 1,000 jobs to Kings­burg, a city of 12,400 peo­ple along High­way 99 about 20 miles south of Fresno.

But, a com­pany spokesman ac­knowl­edged, the Kings­burg cen­ter, along with other new cen­ters in Kansas and New York, would ma­te­ri­al­ize only if the $26 bil­lion merger is ap­proved.

An eco­nomic anal­y­sis com­mis­sioned by T-Mo­bile ear­lier this year in­di­cated that if the merger suc­cess­fully closes this year, the Kings­burg call cen­ter would not be fully staffed and op­er­a­tional un­til 2022, more than two years from now.

A fed­eral court in Wash­ing­ton, D.C., must still ap­prove the terms of the set­tle­ment. In ad­di­tion to the De­part­ment of Jus­tice clear­ance, the merger also re­quires the Fed­eral Com­mu­ni­ca­tions Com­mis­sion to sign off on al­low­ing the ra­dio fre­quency li­censes now held by Sprint and its sub­sidiaries to be trans­ferred to T-Mo­bile.


In April, when the com­pa­nies an­nounced Kings­burg as their choice for lo­cat­ing the cen­ter, Kings­burg City Man­ager Alexan­der Hen­der­son said it was his un­der­stand­ing that T-Mo­bile was in­volved in ne­go­ti­a­tions for mul­ti­ple sites within the city. “Be­tween the jobs and an eco­nomic boost from hav­ing 1,000 peo­ple com­ing into Kings­burg, it’s very good news,” Hen­der­son said.

Hen­der­son added that the city would likely ben­e­fit from in­creased prop­erty taxes from the cen­ter.

An eco­nomic anal­y­sis com­mis­sioned by T-Mo­bile and pre­pared by Emeryville-based Berke­ley Re­search Group ear­lier this year fore­cast that the Kings­burg cen­ter would em­ploy 1,007 work­ers, in­clud­ing more than 840 cus­tomer rep­re­sen­ta­tives plus man­agers and sup­port staff.

“T-Mo­bile es­ti­mates that em­ploy­ees at the cen­ter will have an av­er­age weekly com­pen­sa­tion be­tween $1,129 and $1,254,” in­clud­ing both salary and ben­e­fits, the Berke­ley Re­search re­port stated. The to­tal pay­roll at the cen­ter, in­clud­ing ben­e­fits, is ex­pected to be be­tween $56 mil­lion and $65 mil­lion a year.

The re­port fore­casts that an­nual lease costs for the call cen­ter would be about $1.5 mil­lion.


In its an­nounce­ment of the set­tle­ment, the Jus­tice De­part­ment said al­low­ing T-Mo­bile and Sprint to merge will speed the devel­op­ment and de­ploy­ment of 5G tech­nol­ogy, the next step up from cur­rent 4G cellular tech­nol­ogy.

“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 Makan Del­rahim, as­sis­tant at­tor­ney gen­eral in the an­titrust divi­sion of the Jus­tice De­part­ment.

Still com­pli­cat­ing mat­ters is a sep­a­rate law­suit filed in June by the at­tor­neys gen­eral of Cal­i­for­nia, New York, Colorado, Con­necti­cut, Mary­land, Michi­gan, Mis­sis­sippi, Vir­ginia, Wis­con­sin and the Dis­trict of Columbia chal­leng­ing the merger.

Hawaii, Mas­sachusetts, Min­nesota and Ne­vada have since signed on as plain­tiffs. That suit, filed in a New York fed­eral court, ar­gues the merger would cre­ate the largest wire­less com­pany in the coun­try, leapfrog­ging past Ver­i­zon and AT&T, with the ef­fect of re­duc­ing com­pe­ti­tion and po­ten­tially in­creas­ing prices for cus­tomers.

The states’ law­suit seeks a rul­ing that the merger vi­o­lates fed­eral an­titrust law and asks the court to is­sue an in­junc­tion block­ing the merger.

T-Mo­bile and Sprint are the third- and fourth­largest wire­less com­pa­nies in the U.S. Ear­lier this year, T-Mo­bile re­ported that it had more than 81.3 mil­lion sub­scribers, while Sprint re­ported nearly 55 mil­lion sub­scribers.

The fed­eral set­tle­ment re­quires the com­bined com­pa­nies, known as New T-Mo­bile, to sell Sprint’s pre­paid wire­less phone busi­nesses, in­clud­ing Boost Mo­bile and Vir­gin Mo­bile to DISH for $1.4 bil­lion. T-Mo­bile and Sprint must also make avail­able to DISH at least 20,000 cellular sites and hun­dreds of re­tail lo­ca­tions that would be de­com­mis­sioned by the merger, and pro­vide DISH with ac­cess to T-Mo­bile’s net­work for seven years while DISH works to build its own 5G net­work.

Fed­eral reg­u­la­tors said the set­tle­ment ef­fec­tively will en­able DISH to ex­pand its busi­ness be­yond satel­lite TV and be­come a sig­nif­i­cant player in the wire­less in­dus­try. A state­ment is­sued by the De­part­ment of Jus­tice said that with­out the di­vesti­ture of the Sprint as­sets to DISH, “the pro­posed ac­qui­si­tion would elim­i­nate com­pe­ti­tion be­tween two of only four fa­cil­i­ties­based sup­pli­ers of na­tion­wide mo­bile wire­less ser­vices.”


Cal­i­for­nia At­tor­ney Gen­eral Xavier Becerra re­mains un­con­vinced. “Our con­cerns with this merger have been, are, and con­tinue to be about the harms posed by over­con­sol­i­da­tion and di­min­ished mar­ket com­pe­ti­tion,” Becerra said in a state­ment re­act­ing to the fed­eral set­tle­ment. “A mar­ket­place with fewer ac­tive com­peti­tors drives up costs, re­duces con­sumer choice, and thwarts in­no­va­tion.”

Becerra said Cal­i­for­nia and the other states would con­tinue to op­pose the merger in court. Becerra said their con­cerns in­clude whether DISH has the abil­ity to per­form its obli­ga­tions un­der the fed­eral set­tle­ment.

“DISH does not have the net­work to op­er­ate as an in­de­pen­dent com­peti­tor, like Sprint does to­day, and will in­stead re­main re­liant on the TMo­bile net­work for the fore­see­abel fu­ture,” ac­cord­ing to a state­ment from Becerra’s of­fice.

“T-Mo­bile and Sprint are ask­ing Amer­i­cans to trust that this new mega­cor­po­ra­tion will act di­rectly against its own eco­nomic in­ter­ests by help­ing trans­form DISH into an in­de­pen­dent com­peti­tor that ri­vals this new com­pany.”

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