Sprint and T-Mobile are two of America’s largest mobile phone carriers. Earlier this year, both companies had shown interest in merging. SoftBank was prepared to give up control to do a deal with T-Mobile, sources familiar with the company’s thinking told Reuters in February. Both Sprint and T-Mobile said they were open to exploring other options.
The two companies were close to announcing a merger in 2014, but called it off at the last minute due to regulatory concerns.
Industry executives said a combined Sprint-T-Mobile entity would have the scale, network and enhanced portfolio of wireless airwaves and a better chance to develop 5G, the next generation of wireless technology.
However, if T-Mobile and Sprint had agreed on merger terms, they would also face challenges convincing antitrust regulators that their deal should be approved.
“This is good news for consumers – a potential merger by T-Mobile and Sprint could have raised serious antitrust issues,” Senator Amy Klobuchar of Minnesota said in a statement.
On Saturday, though, the companies announced that they called off merger talks to create a U.S. wireless company that would rival market leaders, leaving No. 4 provider Sprint to engineer a turnaround on its own.
The announcement marks the latest failed attempt to combine the third- and fourth-largest U.S. wireless carriers, as Sprint parent company, SoftBank Group and T-Mobile parent company, Deutsche Telekom AG, were unwilling to part with too much of their prized U.S. telecom assets.
A combined company would have had more than 130 million U.S. subscribers, behind Verizon and AT&T.
The failed merger could also help keep wireless prices low as all four providers have been heavily discounting their cellphone plans in a battle for consumers.
“Consumers are better off without the merger because Sprint and T-Mobile will continue to compete fiercely for budget-conscious customers,” said Erik Gordon, a Ross School of Business professor at the University of Michigan.
The companies’ unusual step of making a joint announcement on the cancelled negotiations could indicate they still recognize the merits of a merger, keeping the door open for potential future talks. Sprint and T-Mobile said they ended talks because the companies “were unable to find mutually agreeable terms.”
John Legere, chief executive of T-Mobile, said in the statement that the prospect of combining with Sprint was compelling, but “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.”
Sprint CEO Marcelo Claure said that even though the companies could not reach a deal, “we certainly recognize the benefits of scale through a potential combination.”
Claure also said Sprint agreed that it is best to move forward on its own with its assets in place, “including our rich spectrum holdings, and are accelerating significant investments in our network to ensure our continued growth.”