T-Mobile Begins Layoffs After MetroPCS Merger Clears Hurdle

T-Mobile is planning "significant" layoffs in its Bellevue, Wash., headquarters, starting as soon as March 7, despite promises of job creation.

Deutsche Telekom's merger of its T-Mobile brand with MetroPCS was originally pitched to federal regulators as an opportunity for job growth. But a new report said T-Mobile is planning "significant" layoffs at its Bellevue, Wash., headquarters, beginning as soon as March 7.

"Employees are expecting the cuts, which may affect more than 100 people in marketing and other groups, to happen Thursday," The Seattle Times reported March 6.

Last year, T-Mobile cut more than 4,200 jobs, a majority of them in its call centers, and then let go another 900 workers across the country.

On March 4, the Communication Workers of America (CWA) provided documents to the Federal Communications Commission (FCC)—a public version contains considerably blackened-out sections to protect "highly confidential" information—stating that Deutsche Telekom and MetroPCS' assertion that the combination of the latter with T-Mobile would create job opportunities is false. In addition, the CWA said the companies' recent admission that there will in fact be a "relatively small number" of job cuts is still inaccurate.

The letter goes on to state:

CWA pointed out through document after document why the Applicants' characterizations unfortunately are just not true. As CWA predicted in its initial comments, the synergies touted by the Applicants are indeed euphemisms for firing workers, and CWA believes the numbers reflected in those documents are significant, not "small." ...

CWA sees no legitimate reason that the aggregate number of projected job losses should be kept confidential. The Applicants should be able to specify the number of projected job cuts not only to the FCC but to the public at large so that the public may understand and accurately evaluate the [transaction's] true impact on employment.

Deutsche Telekom announced March 5 that its deal with MetroPCS had received the approval of the U.S. Department of Justice. It now needs the approval of the FCC, the Committee on Foreign Investment and MetroPCS shareholders, who are scheduled to vote on the merger April 12.

MetroPCS told shareholders March 5 that if they don't vote in favor of the merger, "there is no assurance that MetroPCS will be able to deliver the same or better stockholder value."

The FCC made clear in late 2011, when it aggressively disapproved of a merger between T-Mobile and AT&T, that it wasn't afraid to get in the carriers' way. But since then, the agency has been far more tame, and the industry consensus is that the latest T-Mobile merger will be approved.

T-Mobile is currently the fourth-largest wireless carrier in the United States and the only top-four carrier without an iPhone to sell or a deployed Long Term Evolution (LTE) network—both of which it plans to change this year.

With the MetroPCS merger, T-Mobile officials also hope to remedy its bottom line. MetroPCS will bring with it customers and spectrum, and T-Mobile plans to use the smaller carrier to help it better take advantage of the fast-growing prepaid market and what T-Mobile calls the "value market."

By 2015, it plans to return to growth, which will mean luring away customers from its larger rivals and muscling ahead of No. 3 carrier Sprint.

"T-Mobile's long-term initiatives with network modernization and the integration of MetroPCS in 2013 will help the operator recover," Technology Business Research analyst Eric Costa said in a Feb. 28 research note, following the results of T-Mobile's latest earnings results. "However, short-term growth will be limited due to the competition's time-to-market advantage over T-Mobile in terms of LTE rollouts, and the iPhone offerings, in the postpaid space."

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