June 27, 2018 / 8:50 PM / 19 days ago

Sprint, T-Mobile defend proposed tie-up before U.S. Senate panel

WASHINGTON, June 27 (Reuters) - T-Mobile's planned $26 billion acquisition of rival mobile phone carrier Sprint Corp would add jobs and would not hike prices, top executives of the two companies testified before a U.S. Senate panel on Wednesday.

The two companies, which are the third- and fourth-largest wireless carriers, agreed to the all-stock deal in April, which they said would create thousands of jobs and help the United States beat China to creating the next generation 5G mobile network.

The chief executive of T-Mobile, John Legere, told a Senate Judiciary Committee panel that oversees antitrust issues that much larger rivals AT&T Inc and Verizon Communications Inc have advantages that the two companies cannot address without combining.

"They are much larger and more diversified, so they have a significantly better cost structure," Legere said. "Verizon and AT&T have scale and asset advantages that even our best offerings cannot overcome." He said it would be the "complete annihilation" of the brand if a combined T-Mobile-Sprint acted like its larger rivals.

Sprint Executive Chairman Marcelo Claure said the company had lost over $25 billion in the past decade, its headcount fell from 40,000 in 2011 to 30,000 in 2017, and it has $32 billion in debt even as it became net income positive last year for the first time in 11 years.

"We still are unable to spend at parity with Verizon and AT&T, much less catch up to their previous investments," Claure said.

The U.S. Justice Department and the Federal Communications Commission are reviewing the merger.

Gene Kimmelman, president and chief executive of Public Knowledge, an advocacy group for an open internet and affordable communications tools, told the committee that approving the merger "rather than forcing (T Mobile) to fight for customers, will eliminate the combined company’s need to disrupt the market and create an incentive to maintain the existing market structure."

Kimmelman said countries that have gone from four to three wireless carriers have higher prices for wireless service, citing Canada as an example.

Senator Amy Klobuchar, the ranking Democrat on the committee, asked if the combined carrier could hike prices to just below what AT&T and Verizon charge and retain customers.

Claure denied that. "In order for us to gain market share with the new network that is going to be built we're going to have to lower prices in order to be able to fill that capacity," he said.

Legere said the combined company would hike overall employment, but acknowledged that there would be a reduction of 3,295 full-time retail jobs through 2024, along with other part-time and distributor job losses even as he rejected union forecasts of much larger losses. (Reporting by David Shepardson Editing by Leslie Adler)

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