Nov 4, 2017

T-Mobile, Sprint break off merger talks

Ina Fried, author of Login

T-Mobile said Saturday it has ended merger talks with Sprint after being unable to come to a satisfactory deal.

"The prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders, T-Mobile US CEO John Legere said in a statement. “However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile's shareholders compared to our outstanding stand-alone performance."

"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."

Why it matters: The No. 3 and No. 4 wireless carriers had been widely expected to combine in an effort to better compete against far larger AT&T and Verizon.

The two companies have been holding talks on and off for years, having scrapped an earlier deal after it became clear under President Obama that the FCC would not approve any combination of the two. Current FCC Chair Ajit Pai has been non-committal but the Trump Administration has been seen as more open to big deals generally.

A key sticking point this time appears to have been control over the combined company. SoftBank owns a majority stake in Sprint, while Deutsche Telekom has a controlling interest in T-Mobile US.

The move could pave the way for each to seek other deals, possibly a combination with a cable company or another global telecom company. And, despite Saturday's pronouncement, it's also possible the two will reignite talks at some point.

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