KANSAS CITY, MO (KCTV) -- Top executives for Sprint and T-Mobile were in court Wednesday, fighting several states’ attempt to block their merger. KCTV5 News talked with a local expert to break down what’s next.
“To lose them would be catastrophic to Kansas City,” Rockhurst University Accounting Professor Tony Tocco said.
Tocco has been following Sprint for 20-plus years, from back when they first built their world headquarters in Overland Park through round after round of layoffs now operating at a loss, he says, and loaded with debt.
“Nobody’s going to loan Sprint any more money. They’re locked out,” Tocco said.
The states’ argument against the Sprint/T-Mobile merger is fewer providers means less competition means higher prices, but Tocco says that argument is flawed.
“If they looked at Sprint’s financial statements, they'd understand that Sprint can't survive without T-Mobile. They can't,” Tocco said.
Sure, he says, going from four to three could cost consumers a bit in the short run. But without this merger, Sprint will fail, leaving three anyway. And because Verizon and AT&T have so much more money than T-Mobile, eventually it will fade away too.
“And now you got two behemoths running everything. Is that what they want? Because that's eventually what they're going to get,” Tocco said.
Financial publications say Wall Street is worried the federal judge will rule against the merger. But Tocco says what matters is what the Justice Department decides. So the outcome of the trial with the group of states isn’t a deal breaker.
“They can make it difficult to operate in their states, but they can’t hold up a merger,” Tocco said.
The DOJ and the FCC voted last year to approve the deal, but it hasn’t been finalized. Tocco’s main concern is that if the judge rules against the merger, it could influence the DOJ to change its position. It will likely be weeks or even months before the federal judge issues his ruling.