What seemed like a done deal a week ago has turned into no deal at all. Number three and four US carriers T-Mobile USA and Sprint issued a joint statement today have ended merger discussions after they were unable to agree on mutually agreeable terms.
Reading between the lines of the companies’ statement, the key sticking points seem to have been money and control. Although the proposed merger was reportedly an all-stock deal, Sprint management appears to feel that T-Mobile wasn’t offering its shareholders enough shares of the combined company. Sprint’s statement hints that the deal undervalued its assets, especially its huge reserves of, mostly undeveloped, high band spectrum. T-Mobile’s suggests that Sprint’s proposed terms didn’t offer enough value to T-Mobile’s shareholders, i.e., the price was too high.
The New York Times reports that the ultimate deal breaker was over control. The CEOs of T-Mobile and Sprint’s parent companies, Tim Höttges of Deutsche Telekom and Softbank’s Masayoshi Son met earlier today at Son’s Tokyo home. Höttges delivered T-Mobile’s final offer, which likely included more equity for Softbank. Son reportedly rejected the offer because it did not give Sprint and Softbank management enough control over the combined company
So for now at least, Sprint and T-Mobile remain independent. Both companies pledged to move forward with investments in their networks. Sprint’s also expressed a desire “to establish strong partnerships across multiple industries”, which I take to mean that it’s still interested in a merger or acquisition. I think Son is going to have trouble finding someone willing to meet his terms.