On Wednesday, President-elect Donald Trump made a huge announcement: because of his presidency, Sprint has decided to bring back or create 5,000 jobs in the United States, while satellite startup OneWeb will create another 3,000.
The claim, however, was false. Those jobs are part of a $50 billion investment from SoftBank, which owns 80 percent of Sprint and has made a large investment in OneWeb, that was previously announced as part of a deal with a Saudi investment fund before Trump won the presidency. Meanwhile, not all of the jobs promised by Sprint will be at the company itself, but instead at contractors.
But it’s in both the company’s interests and Trump’s to create glowing, if misleading, headlines about cooperation between the administration and the corporation.
For Sprint, cozying up to Trump is almost certainly related to the hope that it can get approval of its previously failed attempt to merge with T-Mobile. Sprint was in the process of making a bid to buy T-Mobile in 2014, and thus combining the third and fourth largest wireless carriers in the country, but ended up abandoning the plan in the face of regulatory opposition from the Department of Justice (DOJ) and the Federal Communications Commission (FCC). Both agencies have stated an intent to keep four major carriers in the country, rather than let them combine, under current leadership.
While Sprint has been able to remain solvent since then, it hasn’t turned an annual profit since 2006 and has more than $30 billion in total debt. SoftBank’s CEO Masayoshi Son, who personally met with Trump after the election and re-announced his company’s intents to invest in the United States from Trump Tower, has made it clear that he sees consolidation as a must for getting the company to profitability. “We need scale,” he told Bloomberg in 2014. And he still reportedly has his eyes on T-Mobile.
If the FCC and DOJ become more friendly to mega-mergers under Trump, that would be an enormous win for the company. And even before Sprint started currying favor with Trump, his administration has been shaping up to be just what the company is looking for. One of the president-elect’s top policy advisers on technology has suggested abolishing the FCC altogether and is a proponent of industry mergers, writing, “Telecommunications network providers and ISPs are rarely, if ever, monopolies.” Other advisers are staunchly against net neutrality regulations that aim to keep the internet a level playing field but have been opposed by giants like AT&T and Verizon.
For Trump, the announcement on Wednesday follows a pattern since he won the White House of boasting about personally saving jobs, garnering positive headlines, with disregard to the actual details. Following up on a campaign threat, Trump claimed late last month to have convinced air conditioning and heating company Carrier to keep jobs in the United States that it was planning to move to Mexico. But the company is still shipping 1,300 across the border while retaining fewer than 800 here.
And while Trump promised to force other companies to keep jobs in the country by cracking down on them, Carrier has faced no penalties, yet was handed a $7 million tax incentive package and the promise of business-friendly tax reform. Trump has also done nothing so far to keep jobs from leaving for Mexico at another Indiana manufacturing plant.
The losers of all this phantom dealmaking are Americans. Trump may be boasting about creating 8,000 jobs between Sprint and OneWeb, but Sprint alone has already shed 9,000 jobs since 2012.
If the company is successful in merging with another large carrier, the job cuts are only likely to get deeper. When two rival companies merge, the cost savings often come from “synergies” and eliminated redundancies — or, in other words, overlapping jobs. It’s a very common trend with high-profile deals: according to a Reuters analysis of mega deals between 2002 and 2012, 14 of the 17 total had fewer employees after the deal was done, with jobs falling by an average of 15 percent.
Meanwhile, wireless internet customers have seen lower prices since merger talks between Sprint and T-Mobile were halted.