Sprint drops bid to buy T-Mobile, changes CEO
The move is a rare setback for Sprint’s Japanese parent, SoftBank Corp., whose billionaire founder Masayoshi Son had seen the acquisition as key to taking on U.S. market leaders AT&T Inc and Verizon Communications Inc.
The failure to reach a deal could give added impetus to a rival bid for T-Mobile by French telecoms firm Iliad. Iliad made a lower bid than Sprint but is in talks with U.S. cable and satellite companies to sweeten its offer.
Sprint on Wednesday named Marcelo Claure, 43, as its chief executive, effective Aug. 11, to replace Dan Hesse, who has been CEO since 2007.
Claure, who joined Sprint’s board in January, transformed Brightstar from a small Miami-based distributor into a global business with $10.5 billion in gross revenue in 2013.
Although Sprint’s earnings have improved on the back of cost reductions, without T-Mobile its path to growth is unclear and it is expected to struggle.
“Without the prospect of an M&A lifeboat, investors will start to care again about things like, oh valuation,” MoffettNathanson analyst Craig Moffett wrote in a client note.
Under Hesse, Sprint underwent a rip-and-replace overhaul of its network infrastructure, causing cellular sites to go black and creating coverage holes that led to customer dissatisfaction and caused the company to hemorrhage subscribers.
Proxy advisory firm Institutional Shareholder Services last month opposed Hesse’s $49 million 2013 pay package, saying it was not tied to performance.