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Sprint Ends T-Mobile Bid, Ousts CEO

A Sprint Store Ahead Of Earnings Figures
A pedestrian passes in front of a Sprint store in New York City on Saturday, Feb. 8, 2014. Bloomberg—Bloomberg via Getty Images

Resistance from regulators was the last straw for merger talks

Sprint will both end its pursuit of T-Mobile and replace chief executive Dan Hesse, reports the Wall Street Journal.

The $32 billion deal between Sprint and T-Mobile — the U.S. carrier arm of Deutsche Telekom — collapsed after it became clear that U.S. antitrust regulators would not allow it to go through.

CNBC said that the two companies faced steep opposition from the Federal Communications Commission (FCC) in making joint bids for spectrum.

“The FCC told them last week that the two companies will not be allowed to bid on spectrum together,” Scott Nations, chief investment officer and president at NationsShares, told CNBC.

Shares for SoftBank, Sprint’s Japanese parent company, tumbled 3.5% in Tokyo on Wednesday. Deutsche Telekom’s shares were down 2.38% by Wednesday midmorning in Frankfurt.

The nine-month-long merger talks between Sprint and T-Mobile were carried out in the hopes of boosting sales and competition against dominant market players Verizon and AT&T. Sprint has failed to see above the red line for years — having lost money annually since 2007.

But Sprint isn’t the only T-Mobile courtier to see merger plans fall. AT&T’s $39 billion bid for T-Mobile was prevented in 2011 after the U.S. Justice Department sued the second largest telecom company.

News reports indicate that Hesse will be replaced by Marcelo Claure on Wednesday. Claure is the CEO and founder of wireless service company Brightstar Corp. He has also been a Sprint board member since January.

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