SPRINT, T-MOBILE END TALKS
Failed merger bid shows firms’ unwillingness to part with prized US telecom assets
SPRINT Corp and T-Mobile US Inc said on Saturday they have called off merger talks to create a stronger United States wireless company to rival market leaders, leaving No. 4 provider Sprint to engineer a turnaround on its own.
The announcement marked the latest failed attempt to combine the third- and fourth-largest US wireless carriers, as Sprint parent SoftBank Group Corp and T-Mobile parent Deutsche Telekom AG, showed unwillingness to part with too much of their prized US telecom assets.
A combined company would have had more than 130 million US subscribers, behind Verizon Communications Inc and AT&T Inc.
The failed merger could also help keep wireless prices low as all four providers have been heavily discounting their cellphone plans in a battle for consumers.
“Consumers are better off without the merger because Sprint and T-Mobile will continue to compete fiercely for budgetconscious customers,” said Erik Gordon, a Ross School of Business professor at the University of Michigan.
The companies’ unusual step of making a joint announcement on the cancelled negotiations could indicate they still recognise the merits of a merger, keeping the door open for potential future talks.
Sprint and T-Mobile said they ended talks because the companies “were unable to find mutually agreeable terms”.
T-Mobile chief executive officer (CEO) John Legere said in the statement that the prospect of combining with Sprint was compelling, but “we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared with our outstanding standalone performance and track record”.
Sprint CEO Marcelo Claure said even though the companies could not reach a deal, “we certainly recognise the benefits of scale through a potential combination”.
Claure also said Sprint had agreed it is best to move forward on its own with its assets “including our rich spectrum holdings, and are accelerating significant investments in our network to ensure our continued growth”.
Failure to clinch an agreement left SoftBank CEO Masayoshi Son, a dealmaker who raised close to US$100 billion (RM423 billion) for his Vision Fund to invest in technology companies, needing to find another option for Sprint.
Sprint is in the middle of a turnaround plan and has sought to strengthen its balance sheet by cutting costs.
But industry analysts had expressed concern that the company, weighed down with total debt of US$38 billion, had few financial options. Reuters