Using terms like “predatory” and “anti-competitive,” four retail wireless dealers filed suit against T-Mobile in recent weeks, all saying they were basically run out of business since the operator's merger with Sprint.
Absolute Wireless, Maycom, Solutions Center and Wireless Express each named T-Mobile in their complaints. All of them previously sold wireless services for Sprint.
The National Wireless Independent Dealer Association posted on its website on Tuesday that it had received copies of the complaints by at least four dealers from four states.
“Is anyone surprised? No,” said NWIDA President Adam Wolf, noting that concerns about redundant stores and job losses were brought up with federal authorities well before the merger was approved by regulators in 2020.
“How many Sprint stores were next to T-Mobile stores? They were never going to keep both. It makes no economic sense” to have two stores next to one another, he told Fierce. “Even Starbucks are not next to each other.”
According to Wolf, T-Mobile doesn’t want to deal with so many dealers – and the exact number it’s willing to deal with is unknown. “They’re trying to consolidate,” he said. “I don’t know what the number is,” but T-Mobile wants fewer dealers.
T-Mobile provided the following statement to Fierce: “We don’t comment on pending litigation, but our dealers are an important part of how we serve our customers and we have a strong relationship with them.”
Dealers say they’re not welcome here
Both Absolute Wireless of Tennessee and Solutions Center of Connecticut said that unfortunately for the dealers, T-Mobile wanted Sprint’s cellular network and customers but not, as a general rule, Sprint’s dealers.
After the merger, T-Mobile “forced Absolute Wireless and other dealers out of their existing Sprint contracts, which had years remaining on their terms and which were more favorable than T-Mobile’s contracts,” according to Absolute Wireless’ filing.
According to Solution Center’s suit, its principal, Mark Hudson, initially was a Nextel dealer. After Nextel and Sprint merged, he used his life savings to establish Solutions Center, opening his first Sprint store in Connecticut. Over the years, the business grew to 28 stores across four states with more than 200 employees. After Sprint merged with T-Mobile, the business suffered, resulting in more than $25 million in damages.
In its suit, Florida-based Maycom said that before it encountered “T-Mobile’s predatory conduct,” Maycom had been in business for nearly 24 years and was one of the top Sprint dealers.
“In a matter of months, T-Mobile unlawfully devastated Maycom’s business,” the complaint states. “When the dust settled, of the 63 stores that Maycom once owned, only 28 remained to be sold at a T-Mobile created depressed value, 4 were given a limited 1 year lease renewal to operate and 31 stores were shuttered by T-Mobile.”
The relationships between dealers and carriers always have been fraught with turmoil regardless of the carrier. But the relationship at T-Mobile soured even more when Sprint merged with T-Mobile and dealers said they were being run out of business.
Dealers for T-Mobile’s prepaid brand Metro by T-Mobile organized the Metro Dealers Unity Group and accused T-Mobile of poaching their customers. At one point, dealers were told they wouldn’t be permitted to sell other wireless brands if they wanted to continue as Metro dealers.
It’s safe to say that a majority of T-Mobile stores are dealer shops.
In general, a lot of larger dealers at T-Mobile have been purchasing smaller ones, and the store count is significantly down, according to Jeff Moore, principal of Wave7 Research. “The store count is falling and there has been consolidation among dealers,” he said.
At the time of the merger, the number of Sprint and T-Mobile stores was more than 9,000. Today, the number of T-Mobile stores is less than 7,000, Moore said.
The number of Metro stores was 9,000+ just before the deal and has fallen to well under 8,000 now, he added.
Wolf said he doesn't think the complaints will stop with the four dealers known to have filed suit.
“I’d be surprised if this was the last four,” he said. “I think it’s the first four.”
Article updated with additional information from Wave7 on number of stores that have closed.
See original article on FierceWireless.