The Sprint/T-Mobile merger is officially dead

Sprint T-Mobile Merger Dead

The Sprint/T-Mobile merger’s new lease on life apparently was only good for a few hours. The Wall Street Journal brings us word that Sprint has officially given up its quest to buy T-Mobile for $32 billion and will instead try to go it alone in its quest to regain customers and repair its tarnished brand. Apparently Sprint found that U.S. regulators were so completely opposed to the idea of the two carriers merging that it wasn’t worth it to try to get the merger approved.

The Journal also says that Sprint has now ousted CEO Dan Hesse and is replacing him with Brightstar founder Marcelo Claure. Although Hesse certainly wasn’t able to turn Sprint around during his tenure as chief executive, most of the carrier’s biggest mistakes were made before he even took over, including the disastrous decision to merge with Nextel and the choice to go with WiMAX instead of LTE as its 4G wireless technology. Nonetheless, Sprint has kept losing millions of subscribers over the past few years and it’s understandable why Sprint’s board thought it might be time for a change to shake things up.

The bigger question now, though, is what becomes of T-Mobile. Although the scrappy “Uncarrier” has been adding huge numbers of subscribers over the past year, its parent company Deutsche Telekom is still very eager to unload it onto someone else. The botched Sprint merger attempt is now the second time DT has failed to sell off T-Mobile, as the proposed merger with AT&T similarly crashed and burned.

T-Mobile has apparently decided to reject a bid from French carrier Iliad although Reuters reports that Iliad is in talks with investors to see if it can sweeten its offer. Iliad originally offered to buy T-Mobile from DT for just $15 billion, which is less than half of what Sprint was offering and is significantly less than T-Mobile’s market cap, which now stands at $27 billion. Just how much better Iliad can possibly make its offer remains to be seen, although if DT is desperate enough to dump the “Uncarrier” is might take anything.

UPDATE: Per GigaOM, Sprint has now confirmed that Hesse is out as CEO and that he’s being replaced by Claure starting on August 11th.

blog comments powered by Disqus