By Sara Jerome - 03/23/11 09:21 PM EDT
Consumer groups are concerned that AT&T's acquisition of T-Mobile could lead to thousands of layoffs as two become one in the largest wireless merger in history.
AT&T executives are extolling "efficiencies" in the transaction, winning commendations from analysts and lifting company shares after the announcement.
But consumer groups say "efficiencies" is code for an unsettling possibility: the elimination of thousands of jobs.
"There will be hundreds, or even more, of empty storefronts in malls all over the country, and a lot of customer service representatives will lose their jobs," said Andrew Schwartzman, senior vice president and policy director at the Media Access Project, a consumer group fiercely opposed to the merger.
Public Knowledge legal director Harold Feld predicted that "redundant" staff will get pink slips.
"Outlet stores and customer service centers will be consolidated, as will work crews that maintain the networks. I do not know the precise numbers, but I would expect, based on previous mergers, that it will result in the loss of thousands of jobs," Feld said.
But AT&T officials are adamant that the merger will create jobs. That's a corollary of their pledge to invest $8 billion in infrastructure over the next seven years — a key tenet of their argument that the public will benefit from the merger.
"We have a metric that every billion dollars results in 7,000 new jobs, so I think that's bringing new jobs to the economy, bringing new jobs to the country, extending a critical infrastructure to the country, and I think it's good for the overall economy," AT&T executive Ralph de la Vega said in a CNBC interview on Tuesday.
"We have said we are going to invest an additional $8 billion — $8 billion — in infrastructure to facilitate us making this merger work and extending LTE to 95 percent of the population," he said.
Among analysts, the jury is still out on whether the merger will net job losses or gains.
Jeffrey Silva of Medley Global Advisors said employees could lose their jobs as the companies streamline their operations and root out redundancies.
But he noted that this could be offset by the creation of new jobs as AT&T spends on infrastructure over the next seven years.
"It may mean layoffs, and that could become a flashpoint in the debate. Layoffs tend to be inherent in mergers in order to gain efficiencies," Silva said. "But you can't make any blanket statements, because you have the potential, on the other hand, to create jobs with investments in infrastructure."