Sprint, as well as its parent company Softbank, have decided that the regulatory barriers that they would need to overcome to acquire T-Mobile were too high, and will no longer be pursuing a merger between the third and fourth largest wireless carriers in the United States.
Sprint and T-Mobile had been working on a deal, which was valued at somewhere between $31 and $50 billion, for months. Last week, however, French telecom company Illiad made a bid for control of T-Mobile for $15 billion in cash, and offer which Jackdaw Research analyst Jan Dawson claims might have helped sink the merger.
“The Iliad offer might do two things: speed up the timing and increase the price,” Dawson said. T-Mobile has a lot of valuable spectrum and is a catch, Dawson says. “It has lots of headroom in terms of expansion and it (has) good holdings across the country, especially since its purchase of MetroPCS.”
Federal regulators at the Justice Department and the Federal Communications Commission (FCC) have also been worried about increased consolidation of the wireless market. “Ultimately it’s been clear that the regulatory hurdles for Sprint to get a deal done with T-Mobile were pretty high,” Dawson said.
Sprint is also expected to announce a new CEO to replace Dan Hesse, who has held the position since 2007. Many analysts had expected Hesse to leave after the merger with T-Mobile but didn’t expect it to happen so soon. Nikesh Arora, who just left Google to go to SoftBank, has been considered a potential successor to Hesse.
Read more about the story at the New York Times.
This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.