The Sprint T-Mobile deal abruptly halted late Tuesday. After several months of due diligence, Sprint canceled the deal just days after French telecom company Iliad made a bid for roughly $15 billion, less than what Sprint offered, Reuters reports. Sprint’s acquisition offer was as much as $40 billion, while Iliad bid for 56 percent of the company.
Sprint’s effort to purchase T-Mobile was fraught with problems before it started. Last year, AT&T made a bid to purchase T-Mobile for $39 billion but was thwarted by the FTC, which refused to allow the merger in order to ensure competition in the wireless telecommunications arena.
What Does it Mean?
A merger between T-Mobile and Sprint would have enabled T-Mobile to be even more aggressive while simultaneously offering coverage on both GSM and CDMA cellular signal types. Sprint is a CDMA carrier, while T-Mobile uses GSM, the standard worldwide. That would have empowered Sprint to expand its international customer base and grant T-Mobile access to additional US customers. T-Mobile gained 1.5 million subscribers in the last quarter, PCWorld reports, while Sprint has lost 220,000 customers.
Iliad’s founder and CEO Xavier Niel said he sees a huge opportunity for T-Mobile’s expansion with even more aggressive pricing and growth, according to the Wall Street Journal. Niel stated that he expects his proposal to go through much more easily than any US acquisition because it would keep four major carriers in the United States instead of dropping down to three, which the FTC has avoided thus far.
What do you think? Would the Sprint T-Mobile deal have hurt US customers or helped them?
Image courtesy of Flickr
[cf]skyword_tracking_tag[/cf]