Regulatory resistance forces Sprint to drop T-Mobile bid
06 August 2014
Sprint Corp has dropped its bid to acquire the fourth-largest US telecom carrier T-Mobile US Inc as there has been no sign of softening of regulatory resistance even after months of lobbying, people familiar with the matter told Reuters.
The move comes as a setback to the plans of Sprint's Japanese parent SoftBank Corp's billionaire founder Masayoshi Son. The acquisition had been a key element in his plans to take on US market leaders AT&T Inc and Verizon Communications Inc.
Sprint, the No 3 US carrier, and T-Mobile had not ruled out consolidation in the future, though they concluded that a deal was not likely to be approved at this juncture. US regulators had insisted that they wanted to keep the number of major wireless carriers at four.
According to a SoftBank executive, the company did not think the opposition would be that strong.
Commentators say, the failure to reach a deal could give added impetus to a rival bid for T-Mobile by French telecoms firm Iliad, which had put in a lower bid than Sprint but had been in talks to sweeten its offer.
Following the failure of talks, Sprint would appoint as its new CEO Marcelo Claure, founder of mobile phone distributor Brightstar Corp, which was acquired by SoftBank last year. Claure, with a string of awards for entrepreneurship, joined Sprint's board in January 2014.
Meanwhile, shares in Sprint plunged 16 per cent in after-hours trading yesterday on the reports of it having dropped a bid to buy T-Mobile US BBC reported.
Shares in T-Mobile too were down 9 per cent on reports that the Sprint bid had foundered on regulatory resistance.
Meanwhile, French telecom company Iliad is expected to work on a higher offer T-Mobile in conjunction with US cable and satellite companies, including Dish Networks, Cox Communications and Charter Communications, according to reports. It had made a rival cash offer of $15 billion for a 56.6 per cent stake in T-Mobile US.
Softbank shares were down 5 per cent in early morning trading in Tokyo today.
Meanwhile, Sprint, the third-largest US mobile network, and T-Mobile US, the fourth largest, had not ruled out consolidation in the future.