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Ending Widespread Speculation, Sprint, T-Mobile Say No to Merger

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**Editor’s Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from August.**

After more than a year of will-they-or won’t-they speculation, Sprint and T-Mobile have made it clear they are no longer interested in merging.

In a joint release, the two carriers announced they were unable to find mutually agreeable terms.

451 Research's Rich Karpinski

451 Research’s Rich Karpinski

Rich Karpinski, 451 Research’s principal analyst of mobile operator strategies, tells Channel Partners by all accounts it came down to issues of control, and “not so much between T-Mobile and Sprint management as with Sprint owner SoftBank.” He previously said T-Mobile needs the added heft that Sprint brings it to prepare for the next wave of competition with AT&T and Verizon.

“All of those moving parts (and conflicting interests) seem to have made it difficult to get all parties to an agreement,” he said. “It’s hard to find any winners. Sprint needs a boost in the U.S. market, which it won’t be getting. T-Mobile can keep humming along, but it, too, could have used the boost that Sprint offered, both in terms of added subscribers and spectrum. A combined T-Mobile/Sprint could have given SoftBank the powerful U.S. presence it has been seeking; failure of the deal leaves it pumping more money into the market’s No. 4 player.”

Marcelo Claure, Sprint’s president and CEO, and SoftBank board member, said that while an agreement couldn’t be reached, “we certainly recognize the benefits of scale through a potential combination.”

“However, we have agreed that it is best to move forward on our own,” he said. “We know we have significant assets, including our rich spectrum holdings, and are accelerating significant investments in our network to ensure our continued growth. As convergence in the connectivity marketplace continues, we believe significant opportunities exist to establish strong partnerships across multiple industries. We are determined to continue our efforts to change the wireless industry and compete fiercely. We look forward to continuing to take the fight to the duopoly and newly emerging competitors.”

Early last month, it was widely reported Sprint and T-Mobile were closer than ever to merging, potentially announcing a deal at the end of last month. The two carriers reportedly were conducting final due diligence to decide on the exchange ratio that would determine Sprint’s valuation. Setting the stock-for-stock swap price between the two companies reportedly was one of the last steps to sealing the merger.

“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,” said John Legere, T-Mobile’s president and CEO. “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 standalone performance and track record. Going forward, T-Mobile will continue disrupting this industry and bringing our proven ‘Un-carrier’ strategy to more customers and new categories — ultimately redefining the mobile internet as we know it. We’ve been outgrowing this industry for the last 15 quarters, delivering outstanding value for shareholders, and driving significant change across wireless. We won’t stop now.”


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