Unnamed sources told Reuters on Wednesday that Sprint has dropped its bid to acquire T-Mobile because regulators are showing no signs of dropping their opposition to the deal. The move is a major setback for Sprint parent company SoftBank Corp, based in Japan, who saw the deal as a way to take on AT&T and Verizon in the U.S.
Sprint is the No. 3 carrier in North America.
According to the report, Sprint and T-Mobile have not ruled out a consolidation in the future, but for now such a deal will likely not be approved because U.S. regulators want to keep the number of wireless carriers in the United States to just four major players.
"We didn't think the opposition would be this strong," a SoftBank executive told Reuters. "The environment will definitely change."
Effective August 11, 43-year-old Marcelo Claure will be Sprint's new Chief Executive Officer. He will replace Dan Hesse, who has served as CEO since 2007. Claure found his way into the Sprint fold thanks to parent company SoftBank Corp, which acquired his mobile phone distributor Brightstar Corp just last year.
The Reuters source said that Sprint had originally agreed to pay $40 per share, which was part of an agreement that included Deutsche Telekom AG, T-Mobile's majority owner.
However, Sprint isn't the only player gunning for T-Mobile; French telecom firm Iliad has offered $33 per share for a 56.6 percent stake in the company. Partners that may make the deal a bit more attractive include Dish Network, Cox Communications and Charter Communications.
Roger Entner, analyst at Recon Analytics in Boston, told Reuters that the announcement could indicate that the "tables may have turned" on Deutsche Telekom. "As long as there was a Sprint offer on the table, bargaining power was with Deutsche Telekom. Now the bargaining power is with Iliad," he said.
T-Mobile is currently a hot ticket because of its aggressive pricing plans and no-contract campaigns. The company is even offering potential customers to pay their early termination fees if they dump their current carrier and switch to T-Mobile.