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Originally published August 5, 2014 at 4:43 PM | Page modified August 5, 2014 at 8:26 PM

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Sprint cuts off T-Mobile talks, will name new CEO instead

Sprint’s board decided Tuesday to drop its pursuit of Bellevue-based T-Mobile US, and will replace Dan Hesse with a new CEO to pursue its own turnaround plan.


The New York Times

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Sprint and its corporate parent, Japanese telecommunications giant SoftBank, have decided to drop their pursuit of Bellevue-based T-Mobile US after conceding that antitrust regulators would block a deal in an industry that is dominated by just a few large players, a person briefed on the matter said Tuesday.

The decision, made at a Sprint board meeting Tuesday afternoon, is the second failed effort by large U.S. wireless carriers to merge in three years.

And it represents a serious blow by SoftBank to develop a big challenger to the two giants of the U.S. cellphone industry, Verizon and AT&T.

The end of the deal leaves open the question of what paths Sprint and T-Mobile will forge as smaller competitors to the titans of their industry.

Combined, the two control less than a third of the U.S. wireless market.

Shares in T-Mobile fell nearly 9 percent in after-hours trading Tuesday, while Sprint’s shares tumbled 15 percent after the markets had closed.

In recent years, T-Mobile has shaken up the industry with an array of novel pricing plans, gaining admirers among analysts and investors, but Sprint has lost customers for several quarters as it struggles to upgrade its network.

Sprint on Wednesday is expected to announce that it will replace its current chief executive, Dan Hesse, with Marcelo Claure, the person briefed on the matter said.

Claure is the founder of Brightstar, a wireless services company that sold a majority stake in itself to SoftBank last year.

The end of the talks leaves open the question of what Deutsche Telekom, T-Mobile’s majority owner, will do next.

The German telecommunications company has signaled that it would like to sell its T-Mobile stake, and a deal with Sprint would have been the quickest path to that.

Already this year, both Comcast and AT&T have announced deals meant to bolster their reach.

But the existence of both transactions — Comcast’s $45 billion takeover of Time Warner Cable and AT&T’s $49 billion purchase of DirecTV — has made the Obama administration wary of concentrating too much power in the hands of too few companies.

In 2011, AT&T’s attempts to buy T-Mobile for $39 billion failed after the Obama administration sued to block the deal.

T-Mobile and Sprint had discussed a potential deal worth about $32 billion, people said at the time.

A French mobile upstart, Iliad, disclosed last week that it had bid $15 billion for a 56.6 percent stake in T-Mobile US.

But Deutsche Telekom spurned the offer as not competitive and inferior to the bid planned by Sprint. Iliad is reportedly seeking additional partners to shore up its bid.



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