Sprint likely to drop plan to buy T-Mobile due to regulatory challenges

American wireless major Sprint is likely to drop its plan to buy T-Mobile due to regulatory challenges.

CNBC reported that inability to jointly bid on spectrum was the last straw in concluding that the deal would not receive regulatory approval.

The plan to abandon bid comes at a time when the French telecom firm Iliad started talks with investors to improve its $33 per share bid for 56.6 percent of T-Mobile as it expects Deutsche Telekom to reject the offer.

For Japan’s Softbank, which controls Sprint, the decision to drop bid for T-Mobile will be a big block in its growth plans in the American wireless market.

Last month, Fitch Ratings noted that a key factor in determining the success of a Sprint / T-Mobile USA merger will be the combined company’s ability to produce a wireless network on par with the industry leaders in terms of coverage, density and overall network quality.

In fact, the combined entity emerging out of the $32 billion deal between Sprint and T-Mobile would be of comparable size to Verizon and AT&T from a subscriber point of view, thus providing the necessary scale for improved operational efficiency and profitability to better sustain competition over the long term.

Wall Street Journal chart on wireless market

Fitch Ratings said a Sprint / T-Mobile union would improve the network densification required for a higher-speed wireless offering, but would also likely add further integration challenges to Sprint’s already lengthy network migration plans.

Sprint’s poor operational performance in the past, combined with a lack of capital investment and aging infrastructure, resulted in a growing competitive disadvantage as network quality and speed lagged the industry, particularly as Verizon and AT&T accelerated deployment of 4G services.

CNBC report says that analysts voiced concerns about the regulatory challenges facing the companies since the deal was announced. The U.S. Federal Communications Commission and the Department of Justice have expressed a desire to have at least two more network operators competing against AT&T and Verizon.

Eric Costa, telecom analyst at TBR, said recently: “To improve subscriber retention, Sprint’s primary focus remains on building out its Sprint Spark initiative and migrating its existing subscribers onto more lucrative postpaid LTE plans. Network Vision and additional layoffs will start to bend the cost curve down in 2H14, at which point Sprint will show consistent margin growth.”

editor@telecomlead.com

Latest

More like this
Related

Orange Jordan reveals why it selected Nokia to upgrade broadband network

Orange Jordan selected Nokia to upgrade its Broadband Network...

Telecom news: Virgin Media O2, China Telecom, BSNL

Virgin Media O2, China Telecom, BSNL, among others, announced...

Orange revenue up 1.2% due to mobile data focus

Telecom operator Orange said its revenue rose 1.2 percent...

Telecom news: T-Mobile, Starlink, 6G Networks, Telenor, Ceva

T-Mobile, Starlink, Telenor, Ceva, Incheon National University, among others,...