Sprint ends T-Mobile merger interest

Business & Economy -

Sprint has called off its pursuit of T-Mobile after it was unable to convince regulators that the acquisition would ultimately be beneficial to consumers.

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Copyright 2014 Reuters
Copyright 2014 Reuters

Sprint decided Aug. 5 to stop pursuing a potential merger with T-Mobile after running into stiff resistance from regulators, according to multiple reports. The companies had been in talks for the past several months in order to combine their operations to better compete against AT&T and Verizon.

"Four national wireless providers is good for American consumers. Sprint now has an opportunity to focus their efforts on robust competition." Tom Wheeler, FCC Chairman

While neither Sprint nor T-Mobile have yet confirmed the news, the Federal Communications Commission released a statement Aug. 6 supporting the existence of four discrete wireless carriers in the U.S.

Sprint said Aug. 6 that it was replacing Dan Hesse as president and CEO <a href="http://newsroom.sprint.com/news-releases/sprint-names-marcelo-claure-as-new-president-and-ceo.htm" rel="nofollow" target="_blank">with Marcelo Claure</a> (pictured) effective Aug. 11. Claure, a wireless industry veteran, has served on Sprint's board since January 2014. Wikipedia

Sprint said Aug. 6 that it was replacing Dan Hesse as president and CEO with Marcelo Claure (pictured) effective Aug. 11. Claure, a wireless industry veteran, has served on Sprint's board since January 2014.

Sprint is now expected to continue investing in its own wireless infrastructure in an effort to win back subscribers after 10 consecutive quarters of losses. (It currently has about 54.6 million subscribers.) The company has posted losses every year since 2007 following the troubled acquisition of Nextel.

On Aug. 13, T-Mobile CFO Braxton Carter downplayed a $15 billion bid to buy T-Mobile made by French telecom Iliad on July 31, saying it was "very flattering" but ultimately "inadequate."

"The competitive landscape in the U.S. is a lot less aggressive than what we are used to in France. There is enormous potential. It is almost too good to be true." Xavier Niel, Iliad founder

Niel told the Wall Street Journal Aug. 4 that his company would slash the bills of T-Mobile's customers in the U.S. and cuts enough costs to significantly increase T-Mobile's profitability. He said that both Iliad and T-Mobile are "aggressive challengers" that would "animate competition" together.

Sprint was acquired by Japan's SoftBank in a deal worth more than $21 billion in October 2013, while T-Mobile acquired MetroPCS in May 2013 for $1.5 billion. At the time, SoftBank said it was prepared to make significant investments to improve Sprint's position in the U.S.

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