Sprint drops bid to buy T-Mobile, changes CEO

Could give added impetus to a rival bid for T-Mobile by French telecoms firm Iliad


(Reuters) - Sprint Corp S.N has dropped its bid to acquire No. 4 U.S. carrier T-Mobile U.S. Inc TMUS.N after regulatory resistance showed no signs of softening despite months of lobbying, people familiar with the matter told Reuters.

Sprint's shares plunged 19 percent to $5.90, while T-Mobile fell 10 percent to $30.38 on Wednesday.

The move is a rare setback for Sprint's Japanese parent, SoftBank Corp 9984.T, whose billionaire founder Masayoshi Son had seen the acquisition as key to taking on U.S. market leaders AT&T Inc T.N and Verizon Communications Inc VZ.N.

Sprint, the No. 3 U.S. mobile carrier, and T-Mobile have not ruled out consolidation in the future but concluded that a deal is unlikely to be approved at this time, the sources said. U.S. regulators have insisted that they want to keep the number of major wireless carriers at four.

"We didn't think the opposition would be this strong," a SoftBank executive said, but added: "The environment will definitely change".

The failure to reach a deal could give added impetus to a rival bid for T-Mobile by French telecoms firm Iliad ILD.PA. Iliad made a lower bid than Sprint but is in talks with U.S. cable and satellite companies to sweeten its offer.

Representatives for Sprint and SoftBank declined to comment. T-Mobile did not immediately respond to a request for comment.

Sprint on Wednesday named Marcelo Claure, 43, as its chief executive, effective Aug. 11, to replace Dan Hesse, who has been CEO since 2007.

Claure founded mobile phone distributor Brightstar Corp, which was acquired last year by SoftBank.

Claure, who joined Sprint's board in January, transformed Brightstar from a small Miami-based distributor into a global business with $10.5 billion in gross revenue in 2013.

SoftBank said it would buy Claure's remaining interest in Brightstar.


Although Sprint's earnings have improved on the back of cost reductions, without T-Mobile its path to growth is unclear and it is expected to struggle.

Sprint is currently testing a number of new price plans.

"Without the prospect of an M&A lifeboat, investors will start to care again about things like, oh … valuation," MoffettNathanson analyst Craig Moffett wrote in a client note.

"Cash flow is likely to be negative or non-existent for years, and one cannot dismiss the possibility of having to turn to a capital raise to prop up its financial position," he wrote.

Under Hesse, Sprint underwent a rip-and-replace overhaul of its network infrastructure, causing cellular sites to go black and creating coverage holes that led to customer dissatisfaction and caused the company to hemorrhage subscribers.

Sprint did not say if Hesse would leave the company.

Proxy advisory firm Institutional Shareholder Services last month opposed Hesse's $49 million 2013 pay package, saying it was not tied to performance.

Claure's base salary has been set at $1.5 million, with the potential to earn more than $24 million through stock options and performance-based awards.


Sprint had agreed to pay $40 per share under the broad terms of an agreement worked out with Deutsche Telekom AG DTEGn.DE, T-Mobile's majority owner, following months of talks.

Iliad has so far offered only $33 per share for a 56.6 percent stake in T-Mobile. Possible partners for a higher bid include Dish Networks Corp DISH.O, Cox Communications Inc COXC.UL and Charter Communications Inc CHTR.O.

T-Mobile has taken the industry by surprise with aggressive pricing plans and no-contract campaigns, boosting its customer numbers and posting its first net profit in a year in the second quarter.

(Reporting by Soyoung Kim, Marina Lopes and Liana B. Baker; additional reporting by Edmund Klamann in Tokyo and Supantha Mukherjee in Bangalore; Editing by Lisa Shumaker and Ken Wills)


Featured Reports

Content Delivery Networks (CDN) 2015
Content Delivery Networks (CDN) represent large distributed system of servers deployed in multiple data centers across the Internet. CDNs provide solutions for efficiently and effectively managing content of all types. Solutions include core services such as aggregation, management, and distribution of content as well as a variety of value-added functionality.


Cable Carrier Wi-Fi: MSO Take MNO Market Share
How does a cable provider gain a bigger piece of the telecom market pie chart? With a clever Wi-Fi strategy, cable providers are in a unique position to dominate the residential and business telecommunications markets. This is the portent of things to come in the very near future: an MSO as MNO play.


Structured and Unstructured (Big) Data in Telecom Analytics
This report provides the reader with a broad understanding of telecom data (structured and unstructured/big data) and related analytics. The report identifies market drivers and opportunities as well as forecasts for certain key growth areas such as deep packet inspection.


Affordable Market Reports on Big Data, IoT, CDN & More!
Access the exclusive new series of market research reports brought to you through the partnership of Mind Commerce research and TelecomEngine.com.
Browse the latest titles



Featured Events & Partners

GEN 15
Nov. 16-19, 2015

Omni Hotel, Dallas, Texas

The global gathering of networking professionals enabling the future of agile, assured and orchestrated services powered by CE 2.0, LSO (Lifecycle Service Orchestration), SDN and NFV.

Visit event website...