House Democrats urged the Obama administration to approve AT&T’s merger with T-Mobile citing its potential to create jobs, highlighting how the country’s economy may impact the deal’s approval.
In a letter to President Barack Obama, the congressmen said the merger is important because it will create nearly 100,000 jobs and provide wireless Internet service to most of the U.S., which may spur economic development, according to AT&T.
“There is an opportunity before us to immediately create jobs and spur infrastructure investments and technological innovations that will create jobs for years to come,” Rep. Heath Shuler (D., N.C.) wrote in a statement sent to Obama. “By settling the proposed merger of AT&T and T-Mobile we can put thousands of Americans back to work and promote economic development across the country.”
The Justice Department, however, sees the proposed merger differently. Last month, the DoJ sued to stop the $39 billion acquisition, arguing AT&T’s purchase of the Deutsche Telekom-owned carrier would violate U.S antitrust law and “substantially lessen competition” in the wireless market.
The Justice Department also claimed stopping the merger would “help protect jobs in the economy” and was “not a move that’s going to in any way reduce them.”
AT&T may have to overcome its past history of eliminating jobs to convince regulators to approve the merger, according to consumer advocates.
“The company shed 10,000 jobs a year for the past 10 years,” says Gigi Sohn, president of Public Knowledge, a consumer advocacy group. “To the contrary, T-Mobile created jobs at the same time AT&T cut them.”
Even with the Democrats’ support, AT&T may have a long way to go before its merger plans are approved. Obama, who is in the midst of a jobs creation push to combat record unemployment numbers, may favour the merger if AT&T proves it can create large numbers of jobs.
However, the Obama administration may also want to avoid approving a plan that may result in job losses, which ramps up pressure on AT&T to prove the benefits of the merger.
A great deal is at stake over whether the merger is approved. If denied, AT&T will lose its chance to become the top wireless provider in the U.S., and will also have to pay a $3 billion fee to Deutsche Telekom as part of its agreement with the smaller wireless network. The carrier will also have to give T-Mobile free spectrum in some regions and reduce charges for T-Mobile customers who make calls to AT&T subscribers.
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