Sprint Drops Plans for $32 Billion Takeover Bid for T-Mobile USA

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22/08/2014 Leave a comment

The long expected merger of USA based Sprint and T Mobile has been dropped, and Sprint’s CEO has resigned, according to news reports overnight.

For months Sprint has been pursuing a takeover bid for T-Mobile’s US arm, and to all intents was thought to be close to announcing a deal. Significant regulatory hurdles were to be expected, but the deal was seen as pretty much signed save the public announcement.

It’s now reported by multiple news outlets that Sprint held a board meeting on Tuesday and decided to drop the expected USD32 billion bid. It also decided that Sprint’s CEO, Dan Hesse will resign.

He is expected to be replaced by the billionaire entrepreneur, Marcelo Claure.

The loss of the CEO is the price being paid for the failed takeover bid, as the company’s senior management would have been deeply distracted by the complexities of developing the deal and working with regulators.

Sprint’s new majority shareholder, Japan’s Softbank has been said to be concerned at the difficulties of changing the management culture at the firm, which also helped to push out the CEO and bringing in a replacement who has no direct experience of running a mobile network, although as the founder of Brightstar, he is very familiar with the industry.

Although regulatory pressure was thought to be the main problem with pushing the takeover/merger through, there is still likely to be bidding for either Sprint or T-Mobile by rivals as the two networks still lag the near-duopoly of Verizon/AT&T by a wide margin.

Regulators worried that three big players instead of four would reduce competition, but the reality is that the market is now two big players, and a couple of medium sized operators.

Statements by the two mobile networks, and possibly from rival bidders are expected later today.

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