Ever since Japan-based SoftBank took control of Sprint, the company has been standing outside of T-Mobile’s window with a boom box held over its head, trying to woo the magenta-hued wireless company by claiming that the only way they could both survive is if they were together forever as one. But that all came to an end yesterday, when Sprint’s arms got sore, as the company decided to pack up its boom box and went home alone.
The Sprint board pulled the plug yesterday both on its decision to pursue T-Mobile and on CEO Dan Hesse’s nearly 7-year term as CEO — a time during which Sprint failed to make profits or make a ding in its competitors’ market share.
In spite of SoftBank’s insistence that a merger between Sprint and T-Mobile was necessary for either of the companies to survive and compete longterm, early talks with the regulators at the FCC and Justice Dept. confirmed to SoftBank that approving such a merger would be politely described as an uphill battle.
A merger would have left American consumers with only three major national carriers, and the combined T-Mobile and Sprint would still be significantly smaller than either AT&T or Verizon. Approval of the deal had been deemed highly unlikely, especially since T-Mobile has taken on the role of industry disruptor with new and competitive pricing plans that the larger players have had to respond to.
Replacing Hesse in the top spot is Marcelo Claure, the billionaire CEO and founder of Miami-based Brightstar Corp., which is involved in wireless manufacturing and services, but not in actually providing phone service to consumers. SoftBank recently gained a controlling share of Brightstar.
“Marcelo is a successful entrepreneur who transformed a start-up into a global telecommunications company,” said Sprint Chairman Masayoshi Son in a statement. “He has the management experience, passion and drive to create the strongest network and offer the best products and services in the wireless industry.”
Regarding its merger plans, Son says, “[W]e continue to believe industry consolidation will enhance competitiveness and benefit customers,” but that the company’s current short-term focus is on improving Sprint’s business.
With Sprint no longer calling, T-Mobile is once again on the mergers-and-acquisitions version of OKcupid, looking for love.
Last week, French telecom startup Iliad — perhaps sniffing out that Sprint was losing interest — made an unsolicited $15 billion offer for T-Mobile’s hand in marriage. However, since that amount was only about half of what Sprint had been expected to pay, T-Mobile reportedly said no to Iliad’s request to begin doing due diligence on T-Mobile’s finances.
T-Mobile may be more welcoming to Iliad’s advances now that it doesn’t have a better suitor.
A newly single T-Mobile could also draw renewed attention from Dish Network, which had previously expressed interest in merging with a wireless company. The recent announcement that Dish competitor DirecTV would combine forces with AT&T may give Dish reason to try to snap up T-Mobile while it’s on the rebound.
A merger with an international company or a business that provides a service that doesn’t compete in the wireless market is much more likely to win approval than any further consolidation in an industry that has been allowed to dwindle down to only a handful of players.