Despite a clear desire to better compete with Verizon and AT&T, Sprint has vetoed a deal to take over MetroPCS, a pre-paid wireless company and the fifth-largest U.S. mobile telecommunications network, according to multiple reports.
The carrier’s board of directors is said to have rejected the transaction, even though Sprint CEO Dan Hesse was a proponent of the deal, CNBC reported.
The deal, had it gone through, would have given Sprint additional spectrum and boosted its subscriber base by 9.3 million customers. The transaction would have valued MetroPCS at $8 billion.
Sprint reported a smaller than expected loss, thanks in no small part to sales of Apple’s iPhone, in its first quarter earnings, but the company has done little to boost its position in the market. Last year, Sprint launched a legal assault to block AT&T’s acquisition of T-Mobile (a deal that later fell through) to protect its position. But the third-largest U.S. carrier isn’t doing itself any favors by taking longer than expected to introduce 4G LTE phones.
The Sprint-MetroPCS deal, reported CNBC’s David Farber, was said to be fully negotiated and close enough to completion that it could have been announced after Sprint’s board meeting on Wednesday.
“It is not clear why the Sprint board rejected the deal after CEO Dan Hesse endorsed it and after months of talks between the two companies had already taken place,” Farber said. “I am told that regulatory concerns were not the reason the Sprint board vetoed the transaction, but again [I’m] unclear as to why they would go against a deal that many of them were already well aware of.”
The answer, said Stifel Nicolaus & Co. analyst Christopher King in an interview, is that Sprint’s board of directors has lost confidence in Hesse, who’s future at the company may now be in question.
“It certainly indicates a different line of thinking between Dan Hesse and his board,” King said. “Having this public a breakup on a deal that he’s endorsed is almost akin to no confidence.”
King said Sprint may next consider a takeover of San Diego-based Leap Wireless.
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