Sprint reportedly drops bid to buy T-Mobile
Sprint has dropped its bid to acquire No. 4 U.S. carrier T-Mobile because the challenge of securing regulatory approval for the deal was too steep, a person familiar with the matter told Reuters.
Sprint will name a new chief executive officer on Wednesday to replace Dan Hesse, the person said. Hesse has been CEO of Sprint since 2007. The new chief executive will be an outsider to the company, the person said.
The person asked not to be named because the matter has not been disclosed publicly.
The announcements would signal the end of a prolonged push by Sprint's parent company, SoftBank Corp., to acquire rival T-Mobile, despite warnings from regulators that they wish to maintain four major players in the wireless market.
The Wall Street Journal first reported the news Tuesday that Sprint had abandoned its bid.
Both parties have not ruled out consolidation in the future but came to the conclusion that a deal is unlikely to be approved at this time, the source said
The announcement could open the way for further upheaval in an already turbulent U.S. telecom market. French telecom firm Iliad, whose lower bid for T-Mobile was rejected, is in talks with U.S. cable and satellite companies to sweeten its offer for T-Mobile, Reuters reported earlier on Tuesday.
"Certainly Dish would be a possible partner, or maybe Iliad comes around. They were sounding very enamored with the U.S. market," said Roger Entner, analyst at Recon Analytics in Boston, adding that the announcement could signal the tables may have turned on Deutsche Telekom.
"As long as there was a Sprint offer on the table, bargaining power was with Deutsche Telekom. Now the bargaining power is with Iliad," he said.
Sprint had been working on a deal with Deutsche Telekom AG, T-Mobile's majority owner.
The Wall Street Journal reported that disagreements over financing and a "drop dead" date for the merger, a date when both companies can walk away if the merger has not been completed, contributed to the decision to end talks.
The announcement marks the second blockbuster deal to be abandoned on Tuesday after Rupert Murdoch pulled the plug on Twenty-First Century Fox's bid for Time Warner earlier in the day.
Sprint shares were down 15.66 percent and T-Mobile shares were down 8.85 percent in after-hours trading.
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 significant customer dissatisfaction and caused the company to hemorrhage subscribers.
Representatives for Sprint and SoftBank declined a request for comment. T-Mobile did not immediately respond to a request for comment.