© Reuters. SPRINT AND T-MOBILE US, WAIVE THEIR MERGER
by Liana B. Baker and Anjali Athavaley
SAN FRANCISCO/NEW YORK (Reuters) – Sprint and T-Mobile US (NASDAQ:TMUS) announced Saturday that they had renounced their project to merge in order to create a telecom operator mobile capable of competing with the leaders of the u.s. market, forcing Sprint to find other solutions to continue its recovery.
The japanese Softbank (T:9984), the parent company of Sprint, the fourth mobile operator u.s., and the German Deutsche Telekom (DE:DTEGn), parent company of T-Mobile US, the third mobile operator u.s., did not, it seems, to cede too much control over their respective assets.
If the new entity had seen the light of day, she would have counted more than 130 million subscribers, and is ranked third largest behind Verizon (NYSE:VZ) Communications and AT&T.
The maintenance of four competitors, could lead to the persistence of low prices on a market of mobile american mature.
“There is no fusion, the consumer has everything to gain because Sprint and T-Mobile will continue to be a fierce competition to attract a customer base near its under,” said Erik Gordon, a professor of the University of Michigan.
However, the two operators have taken the initiative to jointly announce the arrest of the discussions, which is not usual. This could mean that they believe that merge is still a relevant choice, thus leaving the possibility of resuming dialogue.
Sprint and T-Mobile have said that they would discuss it more because they could not define “mutually acceptable terms”.
John Legere, ceo of T-Mobile, has highlighted the merits of a merger but he also emphasized that it had to bring value to shareholders in the long term far in excess of what the operator could release himself.
Marcelo Claure, its counterpart of Sprint, has taken note of the disagreement while emphasizing that a closer relationship would be justified at least from the point of view of the achievable economies of scale.
Anyway, Masayoshi son, CEO of Softbank, which has raised a hundred billion dollars so that the fund’s Vision to invest in companies, high techs, must now find an alternative for Sprint.
This last is in the middle of a turnaround plan, but analysts are skeptical in light of a debt that reached $ 38 billion.
Even if the number of subscribers has increased under the leadership of Claure, this came at the price of discounts massive and the cessation of discussions with T-Mobile, deprives Sprint of the economies of scale necessary to invest in its network and compete in a saturated market, argue they.
If it is to remain independent, T-Mobile is better than Sprint, they.
T-Mobile, which Deutsche Telekom holds a 65% stake, is the first operator to have deleted the contracts of employment of 24 months, a decision welcomed by the subscribers and quickly imitated by the competition. A competition that it harasses with its unlimited formulas.
The two operators had attempted a first time to merge in 2014 but they had to forego for regulatory issues.
In fact, even if they were gone at the end of their new proposed merger, they would have had to defend fiercely from the competition authorities.
Sources had said in July Reuters that Sprint was proposing to merge with Charter Communications, a track alternative to a merger with T-Mobile US.
Sources had stated that it was not certain that Charter is interested in an alliance with Sprint.
The capitalization of Charter far exceeds that of Sprint and even if he was interested, he would have to blancseing of Comcast (NASDAQ:CMCSA), the leading cable operator in u.s., because the two companies signed in may an agreement which prohibits any transaction of importance without the concurrence of a reciprocal for a year.
(with Doug Busvine in Frankfurt and David Shepardson, Washington; Danielle Rouquié and Wilfrid Exbrayat for the French service)