Telecommunications Company Sprint Corp. announced on Tuesday that it is cancelling its merger plan with T-Mobile
Sprint's decision came amidst opposition for the merger by certain competitors arguing that a Sprint-T-Mobile merger will create an impossible competition in the market. Along with the announcement of the merger's cancellation, Sprint also publicized that they have replaced Dan Hesse as Chief Executive with billionaire entrepreneur, Marcelo Claure.
"Masa and I are very different and we don't always agree," wrote Mr. Hesse in an email to the Wall Street Journal earlier this year, using Mr. Son's nickname. "But we respect each other a great deal and we communicate that respect to one another regularly."
If the merger materialized, it would have cost Sprint at least $32 billion and would undoubtedly create a stiff competition against other players in the market including Verizon Communications, AT&T.
Sprint will temporarily see competition with T-Mobile since it has gained 4 million new customers over the past five quarters and projected to add more. France's telecommunication startup, Iliad, recently offered T-Mobile $15 billion in an attempt to counter its merger plan with Sprint, and it seemed that it succeeded in doing so. Another interested bidder is Dish Network CEO Charlie Ergen.
Sprint's decision to discontinue the deal saves the company from facing antitrust suits. Sprint has been working to make the deal push through for months but competitors were fervently convincing regulators not to allow the deal to happen. The main concern for the opposition for the Sprint-T-Mobile deal was that the merger between the third and fourth largest wireless network in the country will leave consumers with lesser options and will also affect price dynamics in the market.
This is not the first time that a merger attempt with T-Mobile failed. AT&T attempted to buy Sprint too in 2011 for $39 billion, but failed after the Federal Communications Commission (FCC) ruled that the merger would affect the best interest of the public, as it may harm the competition.