California drops appeal of T-Mobile merger, clears way for 1,000 jobs in Fresno County

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T-Mobile and a former Sprint cellular phone store adjoin each other in Herald Square in New York on Saturday, Dec. 14, 2013.

T-Mobile and a former Sprint cellular phone store adjoin each other in Herald Square in New York on Saturday, Dec. 14, 2013. (Richard B. Levine/Sipa USA/TNS)

One of the final hurdles for development of 1,000 promised jobs in Fresno County was cleared Wednesday when California Attorney General Xavier Becerra announced a settlement between the state and telecom companies T-Mobile and Sprint.

Becerra, speaking in Sacramento, said the state will end its legal challenge to the proposed merger between T-Mobile and its smaller wireless rival, Sprint.

A federal judge in New York ruled last month in favor of the two companies and against California and other states that challenged the $26.5 billion merger. The challenge stemmed from concerns over the deal’s potential to reduce competition in the cellular industry and possibly create price increases for customers.

T-Mobile and Sprint announced their intention to merge in May 2018.

Last year, the companies unveiled plans to establish a new customer call center in the Fresno County community of Kingsburg – but only if the merger eventually materialized.

One by one, various obstacles to the deal have been removed, from antitrust review and approval by the U.S. Department of Justice, approval by the Federal Communications Commission, and the Feb. 11 judgment by U.S. District Court Judge Victor Marrero in New York that rejected arguments lodged in a lawsuit by California and other states about the merger’s potential harm to consumers.

T-Mobile and Sprint are the third- and fourth-largest national wireless carriers in the U.S.

“Despite the acrimony of litigation and lawsuits and court trials, you can really come to terms even with those with whom you go to battle in court,” Becerra said. “The settlement we’re announcing today includes many of the elements we would’ve fought for in court” in an appeal of the New York ruling.

What it means for California

Terms of the settlement between the state and T-Mobile require the merged company, currently dubbed “New T-Mobile,” to:

_Provide low-cost plans available in the state for at least five years.

_Freeze current rate plans for at least two additional years.

_Offer free broadband internet service and a free mobile WiFi hotspot to qualifying low-income households who don’t currently have broadband access.

_Offer “substantially similar employment” to all current T-Mobile and Sprint retail employees in California. Within three years after the deal closes, the new merged T-Mobile commits to having a total number of employees that is equal to or greater than the number of workers employed now by the two separate companies.

_Boost participation in a diversity and inclusion program to 60% of its employees within three years.

_Reimburse California and other states in the appeal coalition up to $15 million for the costs of their investigation and litigation. against the merger.

“This settlement secures many of the different elements of competition that we need to see to believe our consumers will get a good product at a good price because there’s good competition,” he added.

What it means for Kingsburg

An economic analysis commissioned by T-Mobile last year forecast that the Kingsburg call center would have 1,007 employees. “T-Mobile estimates that employees at the center will have an average weekly compensation between $1,129 and $1,254″ in both salary and benefits,” the analysis by Berkeley Research Group stated. Total payroll at the center – which would be expected to be fully staffed and operational in 2022 – is expected to be between $56 million and $65 million a year.

When T-Mobile announced its choice of Kingsburg – a city of about 12,000 people along Highway 99 in southern Fresno County – as the site for one of its new call centers, the company did not disclose whether it plans to own or lease a site in the community. The Berkeley Research analysis, however, indicated that lease costs for a call center site would be about $1.5 million per year.

Kingsburg’s location at the intersection of three sets of county lines – Fresno, Kings and Tulare counties – means that the new center will likely draw its workforce from throughout the region. According to estimates from the state Employment Development Department, Kingsburg’s workforce included about 5,700 people last year, with unemployment in the city estimated at about 400 people.

(The Sacramento Bee contributed to this report.)

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