Sprint Corp has dropped its bid to acquire No4 US carrier T-Mobile US Inc after regulatory resistance showed no signs of softening despite months of lobbying, people familiar with the matter told Reuters.  Sprint’s shares plunged 19% to $5.90, while T-Mobile fell 10% to $30.38 on Wednesday.  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 US market leaders AT&T Inc and Verizon Communications Inc.  Sprint, the No3 US mobile carrier, and T-Mobile have not ruled out consolidation in the future but concluded that a deal is unlikely to be approved at this time, the sources said. US regulators have insisted that they want to keep the number of major wireless carriers at four.  “We didn’t think the opposition would be this strong,” a SoftBank executive said, but added: “The environment will definitely change.”  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 US cable and satellite companies to sweeten its offer.  Representatives for Sprint and SoftBank declined to comment. T-Mobile did not immediately respond to a request for comment.  Federal Communications Commission chairman Tom Wheeler on Wednesday said maintaining four large US wireless carriers was good for American consumers.  Sprint “now has an opportunity to focus their efforts on robust competition”, Wheeler said in a brief statement.  US regulators, including antitrust chief Bill Baer and Wheeler, have been unusually public about their skepticism of a merger of the two carriers.  Sprint on Wednesday named Marcelo Claure, 43, as its chief executive, effective 11 August, to replace Dan Hesse, who has been CEO since 2007.  Claure founded mobile phone distributor Brightstar Corp, which was acquired last year by SoftBank.  Claure, who joined Sprint’s board in January, transformed Brightstar from a small Miami-based distributor into a global business with $10.5bn in gross revenue in 2013.  SoftBank said it would buy Claure’s remaining interest in Brightstar.  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.  Sprint is currently testing a number of new price plans.  “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.  “Cash flow is likely to be negative or non-existent for years, and one cannot dismiss the possibility of having to turn to a capital raise to prop up its financial position,” he wrote.  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. Sprint did not say if Hesse would leave the company.  Proxy advisory firm Institutional Shareholder Services last month opposed Hesse’s $49m 2013 pay package, saying it was not tied to performance.  Claure’s base salary has been set at $1.5m, with the potential to earn more than $24m through stock options and performance-based awards.  Sprint had agreed to pay $40 per share under the broad terms of an agreement worked out with Deutsche Telekom AG, T-Mobile’s majority owner, following months of talks.  Iliad has so far offered only $33 per share for a 56.6% stake in T-Mobile. Possible partners for a higher bid include Dish Networks Corp, Cox Communications Inc and Charter Communications Inc.  T-Mobile has taken the industry by surprise with aggressive pricing plans and no-contract campaigns, boosting its customer numbers and posting its first net profit in a year in the second quarter.
Sprint’s shares fall 19% after ending its pursuit of No4 US mobile carrier because merger was unlikely to be approved