New T-Mobile no longer the “uncarrier”: layoffs, network outage, challenge integrating Sprint network

T-Mobile US Inc. is cutting jobs faster than initially planned after its April merger with rival Sprint Corp. created a company with about 80,000 employees.  Before regulators signed off on T-Mobile’s $26 billion merger with Sprint, executives like former CEO John Legere said that the merger would create many new jobs from “day one.” With the ink barely dry on the deal, it’s abundantly clear that is NOT happening.

T-Mobile said in a securities filing late Wednesday that it expects to spend about $300 million more than initially projected on merger-related costs, primarily on severance expenses, to accelerate expected cost benefits from the deal. The company now expects merger costs before taxes to total $800 million to $900 million during the June-ended quarter.  The “new T-Mo” didn’t detail the number of jobs being cut. T-Mobile ended 2019 with 53,000 workers. Sprint last reported 28,500 employees in early 2019.

T-Mobile Chief Executive Mike Sievert said Tuesday the company seeks to hire workers in 5,000 new positions like retail and engineering over the next 12 months. “As part of this process, some employees who hold similar positions are being asked to consider a career change inside the company, and others will be supported in their efforts to find a new position outside the company,” Mr. Sievert said.

The savings estimates T-Mobile provided investors suggest several thousand jobs are being eliminated, according to Jonathan Chaplin, a telecom analyst for New Street Research. Those cuts don’t include stores run by third-party dealers, some of which will switch to other brands, he added. “They will be cutting redundant positions, but adding other positions as they invest for growth,” Mr. Chaplin said.

T-Mobile last year told lawmakers that the then-proposed merger of the two wireless giants would yield more jobs at the combined company by 2024 than each business would employ on its own.

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Back Story:

Last month, T-Mobile laid off an estimated 6,000 employees from its Metro prepaid division, layoffs that had everything to do with the merger, and nothing to do with the COVID-19 crisis. And on June 15th, hundreds of Sprint employees were unceremoniously fired as part of a six minute conference call during which nobody was allowed to ask questions:

“In a conference call on Monday lasting under six minutes, T-Mobile vice president James Kirby told hundreds of Sprint employees that their services were no longer needed. He declined to answer his employees’ questions, citing the “personal” nature of employee feedback, and ended the call.”

On June 19th, Tech Dirt’s  Karl Bode wrote:

This was all ridiculously predictable. There’s 40 years of documented US telecom history showing that the elimination of a major competitor reduces competition and raises prices (oh hi, Comcast). Global markets (CanadaIreland) have also made this clear. Such deals almost universally result in thousands of layoffs as redundant retail, support, and management positions are culled. It’s why similar deals of this type (AT&T’s 2011 acquisition of T-Mobile, T-Mobile’s 2014 acquisition of Sprint) were blocked. This isn’t a debate topic. It’s not a murky subject. Telecom consolidation routinely ends badly for employees and customers.

Economists made all of these points to the DOJ and FCC, but they were unceremoniously ignored. First by an FCC that couldn’t bother to even read its own staff analysis before rubber stamping the a merger it helped cook up behind closed doors, then by a DOJ whose “antitrust” boss personally escorted the deal to fruition while ignoring all criticism.

If you go back and look at some of ex-CEO John Legere’s blog posts from a few months ago (which I’m sure won’t be around much longer), the CEO repeatedly promised that the merger would be “job positive” from “day one”:

“So, let me be really clear on this increasingly important topic. This merger is all about creating new, high-quality, high-paying jobs, and the New T-Mobile will be jobs-positive from Day One and every day thereafter. That’s not just a promise. That’s not just a commitment. It’s a fact. To achieve what we’re setting out to do – become the supercharged Un-carrier that delivers new value, ignites competition and delivers nationwide real 5G for All – the New T-Mobile will provide an amazing and compelling set of services for consumers.”

Legere was so breathlessly offended by statements to the contrary, he tried to insist that union officials were lying — before reminding everybody he testified under oath about the deal’s looming job explosion:

“We also keep seeing the opposition try to use projected layoff numbers from an analyst’s projections that were based on a completely different deal at a completely different point in time to discredit this merger. It’s SO bad that the head of the Communications Workers Association (CWA) was bold enough to refer to those completely unrelated numbers in a CONGRESSIONAL HEARING. I guess if the real numbers don’t tell the story you want, you can just make up new ones? It’s actually offensive. At the hearings, I raised my right hand and swore under oath to tell the TRUTH… and the truth is that the New T-Mobile will CREATE JOBS.”

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Network Outage:

T-Mobile network suffered a nationwide service failure on Monday. Federal regulators said they would investigate the incident, which led to intermittent voice and data coverage for about 12 hours. Company  chief technology officer Neville Ray later said the problems stemmed from a supplier’s fiber optic circuit going down.  But what happened to automated failure detection and recovery/restoral?

Cellphone carriers’ network backbones usually have several fallback routes should one path get severed. Mr. Ray said that “redundancy failed us and resulted in an overload situation that was then compounded by other factors.” The company said its Sprint customers weren’t affected and vowed to put new safeguards in place.

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Integrating Sprint’s 3G and 5G networks:

The “new T-Mo” also faces the challenge of integrating Sprint’s 3G CDMA network with its own 3G GSM network.  Also the two former carriers were designing different 5G NSA networks, albeit both using 3GPP Release 15 “5G NR” for the data plane.

T-Mobile has had difficulty integrating Sprint’s customers and network assets and building out a faster 5G network throughout the country, The Wall Street Journal reported in May.

Despite pandemic-related challenges, T-Mobile has begun the process of integrating Sprint into the new stand-alone company and tapping into the trove of airwaves it acquired as part of the deal. Many of T-Mobile’s current executives remain in charge, though some Sprint leaders including technology chief John Saw hold key posts in the combined company.

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Separately, AT&T has outlined plans to cut more than 3,400 jobs in the coming weeks, according to the Communications Workers of America, which represents a large share of the telecom and media giant’s 244,000 employees. Those cuts exclude hundreds of other positions potentially eliminated through store closures.

AT&T said it will make “targeted, but sizable reductions in our workforce across executives, managers and union-represented employees” as it overhauls its employee base. The carrier also is closing more stores to cater to online shoppers, a shift the company said it accelerated in response to the coronavirus crisis.

“Reducing our workforce is a difficult decision that we don’t take lightly,” AT&T said in a statement.

In light of the tens of thousands of AT&T layoffs the last few years, does anyone seriously believe that statement?

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References:

https://www.wsj.com/articles/t-mobile-and-at-t-are-cutting-thousands-of-jobs-11592501203

https://www.techdirt.com/articles/20200616/13421144728/yet-more-layoffs-hit-sprint-t-mobile-despite-promises-this-assuredly-wouldnt-happen.shtml

https://www.wsj.com/articles/t-mobile-to-feel-coronavirus-pain-through-2020-11588799462

 

3 thoughts on “New T-Mobile no longer the “uncarrier”: layoffs, network outage, challenge integrating Sprint network

  1. Great article! Do you use Twitter? I’d like to follow you if that would be OK. I’m most definitely enjoy reading the IEEE Techblog and look forward to all your new posts.

  2. The IEEE Techblog is the perfect web site for anyone who
    really wants to read the TRUE STORY of the various telecom topics you cover, like the straight talk about “the new T-Mobile.”

    You understand a whole lot of what’s going on behind the curtain, and convey that to your readers. Most advertising supported technology blog sites don’t do that.

    In the case of “the new T-Mobile” (now combined with Sprint), you certainly put a fresh spin on a topic that’s been discussed for years. Thanks for your incisive and superbly written blog posts.

    Excellent stuff, just great!

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