Two days ago, T-Mobile and Sprint made an announcement revealing that they had abandoned their merger talks. On the other hand, this is the second time that these two companies have unsuccessfully held merger talks in three years. According to the people close to the talks, the merger was meant to build a formidable force that would compete against AT&T and Verizon. This is regarded as a setback to the two companies and their shareholders. For a long period, the two companies have been involved in efforts to create the third strongest wireless company in America. For starters, T-Mobile is a German company that is owned by the Deutsche Telecom. On the other hand, Sprint is a Japanese company that is owned by SoftBank, a technology giant from Japan. Three years ago, the deal would not go through because of the tough opposition that was presented by the Obama administration. The two companies announced that the merger this time would not be possible because of control. The decision to end the talks came when Deutsche Telecom chief executive officer Tim Hottges met with the founder of SoftBank at his Tokyo home. The founder is known as Masayoshi Son. This information was brought to light by a person close to the talks and sought for anonymity because he didn’t want to jeopardize the prospects of his career.
The meeting had also been attended by Sprint chief executive Marcelo Claure. It’s during the meeting that Deutsche Telecom CEO presented new terms for the mergers. The sources said that Mr. Claure and Mr. Son rejected the new terms as they didn’t receive the control that Sprint and SoftBank wanted. The decision to abandon the deal means that the two companies must continue of their own to conquer an already concentrated market that is dominated by well-financed and bigger rivals. This will also translate to a prolonged price war for customers who will have to choose on their own. The two companies released a joint statement saying that they would not come to mutually agreeable terms. T-Mobile chief executive John Legere said that his company has been clear all along that it’s only interested in a deal that gives it the upper hand. The people who were familiar with the situation said that during the entire discussions, the deal hinged on the comfort of Softbank taking the minority stake. This was based on the fact that T-Mobile has a bigger market share.