T-Mobile Lays Off 1,900 Workers, AT&T Blames FCC For The Mess

by Gaurav Kheterpal on March 27, 2012

Life after a merger is usually tough. However, life after a failed merger is much tougher. And that’s what T-Mobile and AT&T are going through at the moment.

T-Mobile last week announced that it plans to cut thousands of jobs as it closes seven customer service facilities across the country. The carrier defended itself stating that it needs to cut costs to “successfully compete as a challenger and value player in the wireless market”.

On the other hand though, T-Mobile is investing heavily in expanding its current data network and developing a new LTE network as well. Wouldn’t that be an additional financial burden? After all, LTE is a rich man’s network.

AT&T, though, has been quick to seize the opportunity to use T-Mobile’s recent layoffs as an excuse to bash the FCC and its rejection of the proposed $39 billion acquisition of the latter.

Following the company’s earnings report for the final quarter of 2011, which saw T-Mobile’s overall revenues down to $4.57 billion from $4.69 billion a year ago and a reported net loss of 526,000 subscribers (with a total of 802,000 contract subscribers, the most lucrative kind of subscriber) in the last three months, it was obvious that T-Mobile needs to come up with a cost cutting strategy sooner than later. However, I’m not sure that mass layoffs are the right way forward for T-Mobile or for that matter, any other carrier.

T-Mobile says it plans to restructure and optimize operations in other parts of the business, which will take place by the end of second quarter of 2012.

In a press release, AT&T stated that the T-Mobile layoffs wouldn’t have happened if the FCC had just let AT&T buy the former.

“Yesterday, T-Mobile made the sad announcement that it would be closing seven call centers, laying off thousands of workers, and that more layoff announcements may follow. Normally, we’d not comment on something like this. But I feel this is an exception for one big reason– only a few months ago AT&T promised to preserve these very same call centers and jobs if our merger was approved. We also predicted that if the merger failed, T-Mobile would be forced into major layoffs,” said Jim Cicconi, AT&T Senior Executive Vice President of External and Legislative Affairs.

As expected, the FCC has responded back strongly stating that AT&T’s proposal to acquire a major competitor was unprecedented in scope and the company’s own confidential documents showed that the merger would have resulted in significant job losses.

I love the part where Cicconi mentions “Normally, we’d not comment on something like this”. Clearly, old habits die hard and if you are AT&T, old habits never die. What do you think?

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

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