WASHINGTON (Reuters) – Executives of T-Mobile US Inc and Sprint Corp faced tough questions from lawmakers on Wednesday about how the companies, the planned merger would affect prices and employment, particularly in the rural areas of America.
The deal to combine the No. 3 and No. 4 U.S. wireless carriers, struck in April, was approved by both companies ‘ shareholders in October and has received national security clearance, but still needs approval from the Ministry of Justice and the Federal Communications Commission.
Representative Mike Doyle, who chairs the House of Representatives Energy and Commerce Committee panel will hold the hearing, raised concerns about the deal, because the U.S. wireless market has only four major carriers. The leaders in the sector are AT&T Inc. Verizon Communications Inc.
“It is hard to think of a (deal) if the consolidation does not result in people losing their jobs, prices go up and innovation is stifled,” Doyle said.
Representative Billy Long, a Republican, expressed concern about the lost jobs in his Missouri district. Representative Dave Loebsack, a Democrat, pointed to the loss of jobs in Iowa, after T-Mobile acquisition of Iowa Wireless last year and said that T-Mobile’s plan to buy Sprint made him “very concerned” about the possible negative effects on the Iowa.
Representative Frank Pallone, a Democrat, said that T-Mobile had sent call centre jobs overseas in 2012, and asked for legal assurances that the new jobs being touted by T-Mobile US Chief Executive John Legere would not be sent offshore as soon as the deal wins approval.
Legere defended the $26 billion deal, arguing that the creation of employment and helping with the construction of the next generation of wireless networks. He said that the merged company would have more capacity, which would result in a pressure to lower prices.
“This is a unique merger in that there is a significant increase in supply,” Legere said. To win support for the deal, T-Mobile previously said it would not increase prices for three years.
T-Mobile US CEO John Legere looks at his phone before testifying to a U.S. House Committee on Energy and Commerce Subcommittee hearing in Washington, U.S. February 13, 2019. REUTERS/Erin Scott
Legere was not without supporters. Representatives Anna Eshoo, a Democrat, and Steve Scalise, a Republican, questions indicated that support for the deal.
In prepared remarks released on Tuesday, Legere highlighted the company’s history of aggressive pricing, said it would have to more than 11,000 new employees by 2024 and promised to compete hard on building the next generation of wireless, 5G called.
He also promised to make 5G without the use of network equipment from Huawei Technologies Co. Ltd. or ZTE Corp, two Chinese telecom companies, is distrusted by the AMERICAN national security experts.
T-Mobile has run into criticism from the trade unions, and consumer advocates, but rural operators are the fiercest opponents.
Carri Bennet, general counsel Rural Wireless Association, said that the merger is “forcing rural Americans to pay more money for wireless services,” particularly if they contract with a mobile virtual network operator that buys wholesale access to Sprint network and re-sells.
She said that Sprint is the only one of the four national airlines, which offers something for the approximation of commercially reasonable roaming rates for rural carriers. “It (the merger) should be denied,” she said.
Communications Workers of America President Chris Shelton told the committee that the deal would “kill American jobs, lower wages, and raise prices.”
Consumer advocates have said that the poorest wireless customers were likely to be disproportionately disadvantaged by the deal, because Sprint and T-Mobile have a large market share in the prepaid plans.
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A group of eight Democratic U.S. senators and independent Senator Bernie Sanders urged the Ministry of Justice and FCC on Tuesday to reject the deal, saying monthly bills up to as much as 10 percent.
The lawmakers who signed the letter of potential or confirmed presidential candidates Sanders, Amy Klobuchar, Sherrod Brown, Kirsten Gillibrand, Elizabeth Warren and Cory Booker.
Sprint shares rose 0.2 percent in afternoon trade while T-Mobile shares fell 0.7 percent.
Reporting by Diane Bartz; Additional reporting by David Shepardson; Editing by Bill Rigby and Meredith Mazzilli