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Cingular Purchases AT&T Wireless

By Oldefar ·
From a purely career perspective, I found this comment by an analyst most interesting -

"They don't need the AT&T Wireless employees at all. They might save some salesman, but everything is redundant," Comack said. "Cingular doubled their customer base and doubled their spectrum, but they can run that with the same amount of employees."

As many IT types wait for some significant recovery in the technology sector, I think that what will really happen is a continued shrinking of technical career opportunities. This is an off shoot of the productivity gains from technology.

To borrow from the military man's lament in the late 1960"s "We the unwilling, doing the unwanted, for the ungrateful, have done so much with so little for so long that we can now acheive anything with nothing."

Assuming a rough equality in employees, about 35K are about to join the ranks of the unemployed. Most of them skilled and experienced in their particular crafts.

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Employee Cost - Cellular

by Oldefar In reply to Cingular Purchases AT&T W ...

Assuming an average annual fully loaded cost per employee of $75K, the premerger manpower cost on each cell phone was about $9.50 per phone per month. After the merger and layoffs, this will drop to about $4.75 but somehow I don't expect to see bills adjusted by the difference.

Currently, the combined Cingular and AT&T workforce support about 650 users each. The merger and elimination of workforce will push that to 1,314 using today's count (46 million customers combined).

With today's technology, I suspect that this represents more of a minimum staff requirement and that with no staff increase the worker to user ratio could at least triple. However, the combined US market likely saturates at that number of users. The result is no growth in the job market for cellular technology workers as a forecast.

Competing companies entering the market would create more jobs, but these competitors would start with at least a $5 per month cost handicap for labor, not to mention the capital investment costs that Cingular and AT&T have had a chance to recoup already.

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Ongoing problem with mergers

by TheChas In reply to Cingular Purchases AT&T W ...

Since the merger happy days of the 1980's, the US has seen a continually shrinking number of choices for consumers. Coupled with fewer jobs and higher prices.

I cannot think of a single merger that has been of benefit to the average US consumer or worker.

Wireless communications are following the same path cable TV has been on since deregulation. The profits from the cost of air-time still have some room for the cost to go down. But, after a few more mergers, the cost of cell phone service will begin to escalate, just as cable TV rates jump to fund each acquisition.

Look at the drug companies. EVERY merger has resulted in fewer choices, higher prices, and lost jobs.

A common generic medication that I take cost just $5 a couple of years ago. Now, that exact same medicine is over $15. I have no doubt that at least half of the cost increase is for debt reduction to pay the cost of mergers.

Ask the people of Kalamazoo Michigan about the benefits of the Pfizer Pharmacia merger.

The time has come for another strong anti-trust US Attorney General in the mold of Robert Kennedy.


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Cost of merger

by Oldefar In reply to Ongoing problem with merg ...

Cingular assumed a debt of $6B with the purchase, which equates to $10.87 per phone in year one. If they cut the total staff in half, the decrease in payroll and benefits will cover the debt in about 18 months.

Cingular also spent $40B for the purchase. This will take about 31 months to recoup assuming staff cuts are in place by month 12 and the debt is paid in year 1.

No assumption has been made regarding redeployment of assets and the value gained by this.

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