Sprint and T-Mobile abandon merger talks
- by Alberto Manning
- in Research
- — Nov 5, 2017
The two mobile companies have been dancing around a possible merger for years. The company had eyed the Deutsche Telekom company as a way to grow its own footprint in the U.S. and take on the two big carriers in the nation, AT&T and Verizon.
Just last week, it seemed like a T-Mobile-Sprint merger was a done deal, but now everything's been thrown into disarray after a rumor said that SoftBank wanted to end the negotiations. T-Mobile CEO John Legere reportedly spoke with his oft-rival, Sprint CEO Marcelo Claure, this week to make clear T-Mobile's commitment to keep negotiations alive.
The terms of T-Mobile's new offer were unclear, according to the Journal.
"While we couldn't reach an agreement to combine our companies, we certainly recognize the benefits of scale through a potential combination".
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The announcement marks the latest failed attempt to combine the third- and fourth-largest US wireless carriers, as Sprint parent SoftBank Group Corp (9984.T), and T-Mobile parent, Deutsche Telekom AG (DTEGn.DE), show unwillingness to part with too much of their prized USA telecom assets. But T-Mobile won't pursue a deal that doesn't "result in superior long-term value for T-Mobile's shareholders compared to our outstanding stand-alone performance and track record", he said.
T-Mobile and Sprint are the U.S.′ third- and fourth-largest wireless carriers, respectively, but they are significantly smaller than AT&T and Verizon, who effectively have a duopoly over USA wireless service. But Washington regulators have frowned on a possible merger.
Sprint has a lot of debt and has posted a string of annual losses. After the government nixed AT&T's attempt to buy it in 2011, T-Mobile led the way in many consumer-friendly changes, such as ditching two-year contracts and bringing back unlimited data plans.
It comes as Sprint has somewhat struggled in an increasingly competitive USA mobile market.
