Sprint Corporation (NYSE:S) quits its efforts to acquire T-Mobile Inc. (NYSE:TMUS), Hires a New CEO and Moves on

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By Thomas Copeland on August 11, 2014 Consumer Staples

Sprint Corporation (NYSE:S) finally quit its efforts to get its hands on T- Mobile Inc. (NYSE:TMUS), changed its strategy and got itself a new chief executive officer. The consumers are quite happy with this move of Sprint corporation (NYSE:S).

Sprint Corporation was trying to convince the regulators that a combined T-Mobile and Sprint corporation would be better for the consumers of United States. However, the company has finally given up on its efforts and hired a new chief executive officer. The new CEO is confident and enthusiastic to take Sprint Corporation (NYSE:S) in a whole new direction.

Sprint is facing a number of issues to carry on its operation smoothly. One such problem is its consumer base; the company has around 55 million clients in the region of United States, making it the third largest United States operator. It is pertinent to note here that Verizon is the largest operator with around 122 million clients whereas AT&T is the second-largest carrier with around 116 million customers. T-Mobile Inc. (NYSE:TMUS) comes at the fourth rank, with around 51 million consumers. Both T-Mobile and Sprint have half the user base size of its competitors. The owner of Sprint, SoftBank, was of the view that Sprint and T-Mobile could compete better with their rival companies if they worked together. However, the regulators seem to share a different view.

The chief executive of SoftBank, Masayoshi Son, started its efforts to acquire T-Mobile Inc. (NYSE:TMUS) in 2013, as soon as SoftBank acquired Sprint. The CEOs of SoftBank and Sprint started pitching this idea to the regulators shortly afterwards the acquisition of Sprint Corporation (NYSE:S). However, the DoJ and FCC opposed the idea. It took Sprint a while to consume the message, but it has finally moved on.

Apart from the governmental concerns, both the companies were not good fits for each other for a number of other reasons as well. To start with, both the companies use different technologies for 3G, and the matter would have been expensive to settle, for the companies have different spectrum holdings. Moreover, T-Mobile Inc. (NYSE:TMUS) is a company that is known for breaking the rules and competing rigorously whereas Sprint Corporation (NYSE:S) is known as more of a conservative company.

There should have been a massive spectrum together with customer divestitures for the merger to be successful, and since T-Mobile and Sprint overlap on both these metrics, the benefits from the deal would have been reduced significantly.

Sprint Corporation (NYSE:S) now plans to change the wireless industry sector of the United States. The previous chief executive of the company Dan Hesse, who held this position for a total of six and a half years, has now been replaced with Marcelo Claure- the CEO and founder of Brightstar. The new CEO is quite confident to turn the U.S. wireless industry.

The company, on the last trading day, August 8, 2014, started its stocks at a price of $5.88 and closed at a price of $5.67, after hitting the highest figures of $5.90. The company has a market capitalization of $23.2 billion.