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Sprint abandons T-Mobile merger plans, replaces chief exec

After months of chasing, Sprint has decided to call off plans to merge with T-Mobile, and has replaced CEO Dan Hesse with Brightstar founder Marcelo Claurce.
Written by Aimee Chanthadavong, Contributor

Sprint has decided to end its pursuit to acquire rival telecommunications firm T-Mobile US.

According to The Wall Street Journal, Sprint's parent company SoftBank Corp believes it was getting too difficult to win over approval from regulators, as there were concerns that if the United States' third and fourth largest wireless carriers merged, it would leave consumers with fewer choices.

The report also said Sprint has appointed Brightstar founder Marcelo Claurce as the company's new chief executive, bumping off Dan Hesse.

Sprint has been eyeing T-Mobile US since December last year, a deal which was being valued at approximately US$32 billion. Sprint had hoped the combination of the two companies would create a stronger entity, and perhaps enough to compete against Verizon and AT&T.

In June, Sprint reported that it was coming close to securing enough funding for the proposed acquisition from banks including JPMorgan Chase & Co, Goldman Sachs Group, Deutsche Bank AG, Bank of America Merrill Lynch, Citigroup, Mizuho Financial Group, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Financial Group.

Now that Sprint is out of the picture, The Wall Street Journal said there are other suitors lining up for T-Mobile including French telecommunications provider Iliad SA, and Dish Network Corp, whose chairman Charlie Ergen has previously said that he would be interested if Sprint's deal fell through.

While T-Mobile appeared it was in trouble during its first quarter results where the company lost US$151 million on revenue of US$6.87 billion, its second quarter earnings report showed greater improvement. The carrier's total revenue lifted by 5 percent from the last quarter to US$7.2 billion. It also reported that it now has 50.5 million customers, up 1.5 million from the first quarter.

In comparison, while Sprint managed to meet analyst expectations in the firm's first-quarter earnings, its declining subscription number still remain an issue. During the quarter, Sprint lost 245,000 net contract subscribers, marginally better than the previous quarter's loss of 383,000, and accounts for over 53 million subscribers overall.

Sprint said it continues to expect calendar 2014 adjusted EBITDA to be between US$6.7 billion and US$6.9 billion.

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