Finance

Sprint, T-Mobile Scrap Merger Talks

Softbank balks at deal, will increase stake in No. 4 wireless carrier 11/04/2017 5:54 PM Eastern

Just a day after they offered a ray of hope that their protracted merger talks would end in a deal, Sprint and T-Mobile officially called it off on Saturday after a meeting between the chiefs of both companies failed to conjure up an agreement.

Sprint and T-Mobile have been doing the merger dance for years, scrapping talks in 2014 after it became apparent they wouldn’t get federal approval for a deal and restarting them this year in the wake of a business-friendly Presidential administration. The two had been in talks for months and seemed to reach an impasse earlier last week after T-Mobile parent Deutsche Telekom made an offer that would give them strict control of the combination. When Sprint parent Softbank balked at that offer, it seemed that the deal was off the table, but on Friday, T-Mobile offered a ray of hope, making a new proposal and scheduling a meeting between the chiefs of both companies for the weekend.

That apparently wasn’t enough. In a brief statement Saturday, Sprint said it has ceased merger discussions with T-Mobile.

“While we couldn’t reach an agreement to combine our companies, we certainly recognize the benefits of scale through a potential combination,” Sprint CEO Marcelo Claure said in a statement. “However, we have agreed that it is best to move forward on our own. We know we have significant assets, including our rich spectrum holdings, and are accelerating significant investments in our network to ensure our continued growth.  As convergence in the connectivity marketplace continues, we believe significant opportunities exist to establish strong partnerships across multiple industries.  We are determined to continue our efforts to change the wireless industry and compete fiercely.  We look forward to continuing to take the fight to the duopoly and newly emerging competitors."

According to the Wall Street Journal, Sprint parent Softbank will instead increase its stake in the wireless company from 80% to about 85%, buying shares on the open market.

The cancellation of the T-Mobile deal could open the door for other potential suitors. Dish Network attempted a deal back in 2013, but was bested by an offer from Softbank. Dish CEO Charlie Ergen said back in August that he expected more M&A to occur in the space,  but would not comment on Sprint. And Softbank, which was rumored to be eyeing a pairing with Charter Communications, could restart those engines, although Charter has specifically said it was not interested in the past.

 
Sen. Amy Klobuchar (D-Minn.), who joined other congressional Democrats to push government regulators to look hard at any potential merger, was pleased.

"This is good news for consumers—a potential merger by T-Mobile and Sprint could have raised serious antitrust issues," she said. "This is exactly why I urged the FCC and DOJ to investigate this potential merger, because maintaining competition among the four largest cell phone carriers leads to lower prices, better service and more innovation."

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