A merger between Sprint and T-Mobile has been discussed for some time, and earlier this year it was thought the move was close to fruition. However, Sprint, the third largest carrier in the United States has decided to pull the plug on its planned purchase of T-Mobile, the fourth. The reason for the potential union collapsing seems to be that the merger would not get clearance from regulatory bodies.
Sprint was willing to pay $32 billion for T-Mobile, a brand that has thrived over the last two years, while Sprint's business has declined amid poor strategy and consumer dissatisfaction. The merger with T-Mobile would have given Sprint some much needed market cache as it looked to solve its problem of losing millions of subscribers. T-Mobile has been exploding over the last two years with its "Uncarrier" model, and the company has earned millions of new subscribers, bloodied the noses of AT&T and Verizon, and basically just won a load of goodwill.
The contrast could not be different for Sprint as it has a poor reputation with customers, has lost subscribers, and has made odd decisions like choosing WiMAX over LTE for its 4G. A move for T-Mobile was seen as an easy fix, but Sprint has become increasingly aware that regulatory bodies fearing a monopoly would not sanction the deal, much like the proposed AT&T/T-Mobile merger collapse. The company will now have to go it alone as it attempts to rebuild its reputation and once again solidify its position in the market.
T-Mobile will for the most part be unaffected by the collapse of the merger as the company seems to be going from strength to strength. However, parent corporation, Deutsch Telekom, still wants to offload the brand, and recently turned down a $15 billion bid from French carrier Iliad. It is thought that Iliad is looking to investors to find a way to improve its offer, with T-Mobile’s market worth sitting at $27 billion.
[VIA]