CNBC reports that Sprint backs off T-Mobile deal; Hesse out as Sprint CEO

CNBC reports that Sprint backs off T-Mobile deal; Hesse out as Sprint CEO
Something big is happening at Sprint. According to a tweet sent by CNBC's David Faber, the nation's third largest carrier has decided to abandon its pursuit of T-Mobile. Additionally, Faber reports that Dan Hesse will be replaced as CEO of Sprint, tomorrow. The shares of both companies have dropped sharply in response to the news, with T-Mobile down 6% to $31.85, and Sprint's shares off 2.5% to $7.10.

While Sprint never officially made a bid for its rival, it was believed that a deal had already been agreed upon, and would be announced next month. But apparently, SoftBank executives, including Sprint chairman Masayoshi Son, have come to the conclusion that it would be too hard to obtain regulatory approval for the deal. Both the FCC and the FTC have gone on record as opposing a Sprint acquisition of T-Mobile.

The timing of this announcement makes it interesting. Last week, French telecom Iliad bid $15 billion for 56.6% of T-Mobile. At the time, it was considered an inferior bid compared to the one that Sprint was expected to make public. Now that Sprint has backed away from T-Mobile, Iliad might be able to pull off what was seen as an improbable deal. The French telecom is seeking partners in order to raise its bid. Also, watch Dish Network. Chairman Charles Ergen has said that Dish would be interested in T-Mobile, if Sprint were to back off.

Meanwhile, we can only assume that Dan Hesse was considered to be too close to the T-Mobile bid, and might have been lobbying for it even after the decision was made to pull out. Because no official bid was ever made, T-Mobile will not receive a break-up fee like it did when AT&T pulled out of its bid to buy T-Mobile in 2012.

Tweet says Sprint is abandoning its deal for T-Mobile, and will replace Dan Hesse as CEO

Tweet says Sprint is abandoning its deal for T-Mobile, and will replace Dan Hesse as CEO


source: @davidfaber, Barron's

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45 Comments

1. Eclectech

Posts: 338; Member since: May 01, 2013

Whaaaaaaaaaaaaaaaaaat????? *Mrs. Garrett*

29. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

I called it the moment Son-boy announced his intent to acquire T-Mo - It wasn't going to happen. Not with AT&T. Not with Sprint. Time to move on.

31. engineer-1701d unregistered

I think someone's gonna get fired if this is not true it's about time they got rid of Haese he's been nothing but a downfall for the last six years

2. BobbyDigital

Posts: 2123; Member since: May 29, 2014

Best thing to happen to Sprint. While I don't advocate for anyone to lose their job but Hesse ran Sprint into the ground. Happy as a T-Mo customer that Sprint is backing off too.

14. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Hesse didnt run into the ground, he did do some good things. However, doing that 20$bln iphone deal instead of spending that money on the network caused a lot of problems for Sprint in the long term that they are going to take a while to recover from. It did stem customer losses, but then again I think they needed to bleed them out a bit so that their network vision upgrades wouldnt have been such a pain to do. Im glad the deal isnt going through, it would have reduced competition and increased prices and cut jobs.

18. BobbyDigital

Posts: 2123; Member since: May 29, 2014

His bad decisions, Nextel, the iPhone deal, dam near put Sprint into bancruptcy. So yes... He may not have run it into the ground, but he came pretty dam close.

23. downphoenix

Posts: 3165; Member since: Jun 19, 2010

He wasnt involved with Nextel, that was the previous ceo.

24. wumberpeb

Posts: 453; Member since: Mar 14, 2011

Nextel wasn't Dan Hesse

41. lsutigers

Posts: 832; Member since: Mar 08, 2009

Hindsight is 20/20. While Sprint needed the iPhone to compete with the other carriers, it is now crystal clear they should have spent the money upgrading their network first before putting that much strain on the old infrastructure. An influx of too many smartphones and explosion of data use hurt Sprint's network before proper upgrades were done. It will take time to recover customer perception but they are still a huge company with 52 million customers. They can recover from this if they make the right decisions, its all about execution going forward.

25. Dr.Phil

Posts: 2248; Member since: Feb 14, 2011

He's also done a lot of things wrong that I think many would say ran the company into the ground. For example, if you look at their "Framily Plan" pricing it costs just as much as AT&T for 4 lines. If they wanted to entice customers to join Sprint from AT&T and Verizon, shouldn't they have pricing that falls more in line with T-Mobile than more of the same? The only thing really going for Sprint is it's prepaid subsidiaries like Boost Mobile which offer a real value in terms of service provided and the devices offered.

35. OldNorseBruin

Posts: 235; Member since: Mar 12, 2013

I believe that Virgin Mobile & Boost ( which are entirely owned and operated by Sprint) ARE the ONLY profitable assets of Sprint...

39. SellPhones82

Posts: 569; Member since: Dec 11, 2008

See, I get a better deal from Framily than I can with anyone else. The name is horrible and the hard part is getting to the 7-10 lines so your at the $25 level for unlimited talk, text, and 1 GB of data. I have the unlimited data and with my company discount pay $40 for unlimited everything, which is the base plan amount for most pre-paid plans. My wife and I went from paying $160 a month to $80. Granted she now has less data, but only used around 1GB anyways.

3. KickRocks

Posts: 260; Member since: Mar 22, 2011

Holy Christ........Thank the lord almighty, hahaha, seriously though, thank god. I'm sure the people of T-Mobile including myself want NO PART OF SPRINT!!!!

4. retronig

Posts: 23; Member since: Nov 21, 2013

Thank god!!! Hesse was a horrible CEO and made bad decisions. He was very overpaid and was a huge waste of money. The jerk is still making out like a bandit though I would assume. I am so glad that tmo wont be part of sprint. I am a tmo customer and the thought of being with sprint was not a happy one. I worked for sprint for 4 years during the Hesse regime and it was very depressing. I spoke with more unhappy customers than happy ones.

9. palmguy

Posts: 954; Member since: Mar 22, 2011

Agree. Worked Sprint thru all the bull (03-12). Crazy times.

43. JEverettnow

Posts: 228; Member since: Mar 11, 2013

You left before it got crazy. Its on another level these days. i hope this is a change for the better. We have been on shakey ground since Son took over.

46. rdaex

Posts: 152; Member since: Oct 24, 2012

Agreed... I left in July of 2013. It was like working for a schizophrenic with ADD. One week to the next, no idea what the push would be, what product we were told to push, the promo included in that push (buy a SPC get a 100 discount, uh.. just kidding... uh, no, were going back to that now. Buy a tablet get 100 off a phone, but not combinable with the SPC offer) Work at Tmobile now and its night and day. I sell stuff. I am allowed to be a sales manager, and its awesome. (And making 40% more doesnt hurt.)

5. mturby unregistered

Yesss!!! we won! consumer 1. dark corps 0 Get the heck out of here Hesse! and dont use the main door.

6. mrmagicman21

Posts: 8; Member since: Jan 21, 2014

Sucks for both companies. Now there will not be true competition for att and vz.

22. Doakie

Posts: 2465; Member since: May 06, 2009

I don't know what people are talking about with these claims that T-Mobile and Sprint are incapable of competing with the two larger companies. They're all offering prices around the same monthly fees, and they're all offering the main handsets that are released. The only way I could see this whole argument is with rural coverage and I still don't get that because a combined company wouldn't magically have spectrum in rural areas either one didn't have it previously. Plus with Sprint buying T-Mobile the combined company would have even more debt due to one borrowing money to purchase the other.

33. engineer-1701d unregistered

I'm not sure if you know this but Sprint is and has the best spectrum of all of the markets now it will take them 3 to 5 years from now to do everything correct another passes out the way but as the Japanese are they will expedite everything and put that money that they were going to use to good use and I myself have truly hated Sprint for the last five years with their terrible network

44. William13

Posts: 27; Member since: Mar 10, 2011

I assume that since your handle says engineer, then you should know a thing or two about how things work. However, Sprint has some of the WORST spectrum available. Their holdings are mostly in the 1800MHz band and the 2.5GHz band. Sure, quantitatively they have more spectrum than anyone else, but with spectrum, quality trumps quantity. They do have some 8 licenses in the 800MHz spectrum (VZW's baby), but not enough for a nationwide infrastructure. That 2.5GHz spectrum can't even penetrate glass with UV coating, so it really has little benefit in real-world cell phone usage. With the upcoming spectrum auctions they might be Able to gain some ground on the lower frequency spectrum, but AT&T and VZW will have something to say about that. (T-Mo has no holdings in those frequencies and I don't see a reason for them to try building a new backbone from scratch)

7. painnpanic

Posts: 31; Member since: Dec 18, 2013

He made 49 million last year for a company that nearly filled bankrupt from his poor decisions. T-mobile deal would have helped but would have never passed. Smart move Softbank. Now they can get someone who can make a difference.

8. meanestgenius

Posts: 21324; Member since: May 28, 2014

I'm happy as a T-Mobile customer that Spring will not be getting their hands on them, but saddened to hear that Dan H. will be losing his job.

37. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

You didn't expect Son-boy to take a hit for pissing away a $1B breakup fee, did you? Next guy down the foodchain is Hesse. It was inevitable.

42. lsutigers

Posts: 832; Member since: Mar 08, 2009

Did you read the article? They didn't have to pay the breakup fee as the deal was never formally announced. BTW, the breakup fee was $2b.

10. palmguy

Posts: 954; Member since: Mar 22, 2011

Sorry for Dan? He made more than Vz, T-Mo, and ATT CEO's. And now he gets a golden parachute. I need me a CEO job. :)

11. HASHTAG unregistered

GREAT NEWS! Never been a T-Mobile customer, but I've been a Sprint customer and... well, don't really need to explain.

12. ajac09

Posts: 1482; Member since: Sep 30, 2009

NO MORE DAN HESSE Now sprint will survive!

13. joe1blue

Posts: 169; Member since: Jul 25, 2013

as for me I was a former Sprint customerfor about 7 years and now I am at T Mobile customer I could not be happier that this merger rumor is endingI can't express how much I hate sprint that's all I can say.

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