US mobile operator Sprint Corp has dropped its bid to take control of smaller rival T-Mobile US after regulatory approval appeared increasingly unlikely, according to multiple reports. The operators’ parent companies, Japanese group Softbank and…
US mobile operator Sprint Corp has dropped its bid to take control of smaller rival T-Mobile US after regulatory approval appeared increasingly unlikely, according to multiple reports.
The operators’ parent companies, Japanese group Softbank and German incumbent Deutsche Telekom, had been in talks for months about merging the US’ third and fourth largest players.
Ever since Softbank took control of Sprint in 2013, its CEO Masayoshi Son had hoped to combine the two companies to create a large player able to compete with market leaders, AT&T and Verizon.
But earlier this week, telecoms regulator the FCC proposed preventing the nation’s largest operators from making joint bids in next year’s spectrum auction – a further indication that a merger between the two companies would be blocked too.
Sprint and T-Mobile were reportedly considering raising US$10bn and forming a joint venture to bid for 600 MHz spectrum in case their merger was not complete by the time the auction took place.
T-Mobile to reject Iliad’s offer
Sprint’s purported decision to walk away from a potential T-Mobile US deal may encourage France’s Iliad to revise its offer for the operator.
Iliad, which owns France’s Free Mobile, made a surprise US$15bn cash offer for a majority stake in T-Mobile late last week. But its US$33 per share bid is much lower than Sprint’s reported US$40 apiece offer and, according to the Financial Times, T-Mobile plans to reject Iliad’s proposal today.
However, the French group is reportedly already in talks with potential partners, including US cablecos and satellite operators such as Cox Communications, Charter Communications and Dish Networks, to sweeten its offer. Discussions have also been held with Canada’s Ontario Teachers Pension and Singaporean sovereign wealth fund GIC, Reuters cited sources as saying.
Unlike a Sprint deal, a merger with Iliad, controlled by billionaire Xavier Niel, would not face regulatory hurdles since the number of large mobile operators would remain at four.
Iliad created a shockwave in France’s mobile industry in 2012 when its Free Mobile unit started offering much cheaper services than its rivals. Orange, SFR and Bouygues Telecom have all seen their number of subscribers decline as a result.
Earlier this year, Iliad, as well as Orange, held talks with Bouygues about a potential merger which later collapsed on valuation issues. TelecomFinance understands that Niel is no longer interested in consolidating the French mobile market and has now set his sights on international transactions.
Softbank and Deutsche Telekom were not immediately available to comment. Iliad, Sprint and T-Mobile US declined to comment.
Sprint has new CEO
Sprint has yet to make an announcement regarding T-Mobile US but confirmed today that Marcelo Claure will become its new CEO from 11 August.
He will join from mobile phone distributor Brightstar, a US unit of Softbank, which he founded and currently heads.
At Sprint, Claure will replace Dan Hesse, who has been CEO since 2007.
Commenting on his new role, Claure said: “In the short term, we will focus on becoming extremely cost efficient and competing aggressively in the marketplace. While consolidating makes sense in the long term, for now, we will focus on growing and repositioning Sprint.”
The Japanese group will buy Claure’s 37.7% indirect stake in Brightstar, giving it full ownership of the distributor.
