Will the T-Mobile and Sprint merger lead to job losses?
On Tuesday, T-Mobile workers sent a letter to Deutsche Telekom’s CEO, Tim Hoettges, seeking job assurance. According to a Reuters report on Wednesday, “T-Mobile Workers United, with about 500 members and backed by the Communications Workers of America and the German union ver.di, urged Hoettges to make solid and verifiable assurances that jobs will be safe, paychecks will not shrink and management will not interfere in union activities.”
Deutsche Telekom owns a 63% stake in T-Mobile. Deutsche Telekom’s management didn’t comment on the matter.
T-Mobile and Sprint merger lawsuit
In April 2018, T-Mobile and Sprint announced an all-stock merger, which valued the latter at about $26.5 billion. The Department of Justice approved the merger. In August, the FCC’s chairman, Ajit Pai, officially recommended approving the T-Mobile and Sprint merger agreement.
However, the merger deal faces a court challenge from the District of Columbia and about 16 states. The lawsuit intends to block the transaction. According to the lawsuit, the merger agreement is anti-competitive and will increase prices for consumers. The court hearing on the lawsuit is scheduled to start on December 9.
On Tuesday, Illinois Attorney General Kwame Raoul joined the multistate lawsuit trying to block the Sprint and T-Mobile merger. Meanwhile, T-Mobile stopped its 5G network buildout efforts amid its pending merger with Sprint.
New York City sued T-Mobile
According to a Reuters report, New York City authorities sued T-Mobile for “engaging in rampant sales abuses of customers for its lower-priced, prepaid wireless brand, Metro by T-Mobile.” The report said that “it had identified more than 2,200 violations by T-Mobile, whose pervasive illegal activity spanned 56 Metro stores in all five boroughs, including authorized dealers and stores run by its MetroPCS NY unit.”
T-Mobile’s postpaid subscriber growth
T-Mobile’s postpaid subscriber growth has significantly outpaced its peers in the saturated US wireless market. The company’s postpaid subscribers increased 11.4% YoY (year-over-year) to 44.6 million at the end of the second quarter.
Sprint’s postpaid subscribers increased 2.8% YoY to 33.1 million during the same period. AT&T’s (T) postpaid subscribers in its combined domestic wireless operations fell 1.4% YoY to 76.3 million at the end of the second quarter.
T-Mobile stock rose 0.6% on Wednesday and closed at $77.61. The stock’s five-day, one-month, and year-to-date price movements were 0.6%, -0.2%, and 22.0%, respectively. Notably, the stock is trading 8.9% lower than its 52-week high of $85.22. The stock is trading 29.4% higher than its 52-week low of $59.96. T-Mobile stock has also risen 18.0% in the trailing 12-month period.
Sprint and AT&T have risen 10.8% and 12.1%, respectively, in the trailing 12-month period. On Wednesday, Sprint stock rose 0.9% and closed at $6.76, while AT&T stock rose 1.0% to $35.72.
AT&T’s market capitalization is $261.0 billion, while T-Mobile and Sprint have respective market caps of $66.3 billion and $27.7 billion.
Based on the closing price on Wednesday, T-Mobile stock was trading 0.15% above its 20-day moving average of $77.49, 0.01% below its 50-day moving average of $77.62, and 1.7% above its 100-day moving average of $76.28.
To learn more about the T-Mobile and Sprint merger deal, read T-Mobile Asks Court to Clear the Sprint Merger and T-Mobile: Oppenheimer’s Views before Sprint Merger.