Report: Sprint abandoning T-Mobile bid, replacing CEO Hesse with Brightstar's Claure

Sprint (NYSE: S) and its parent company SoftBank have decided not to pursue an acquisition of T-Mobile US (NYSE:TMUS), according to multiple reports. And the country's third largest operator is reportedly ready to replace CEO Dan Hesse with Marcelo Claure, the head of mobile phone distributor Brightstar, possibly as early as tomorrow.

According to multiple reports, which cited people familiar with the matter, Sprint decided that an acquisition of T-Mobile would face too much regulatory opposition. Indeed, officials from the FCC and Department of Justice have made no secret of their desire to retain four nationwide wireless carriers.

In addition, reports from the Wall Street Journal, Re/code and others said that Brightstar's Claure would replace Hesse as CEO of Sprint. SoftBank acquired control of Brightstar in January and put Claure on Sprint's board--he will now be tasked with reviving Sprint's customer acquisition strategy, likely through lowered prices.

Sprint is expected to make an announcement about the news early tomorrow.

The news wires have been working overtime to keep up with Sprint and T-Mobile's various juxtapositions in the past 24 hours. The news of Sprint's abandonment of the T-Mobile deal comes just hours after numerous reports said that T-Mobile US and parent Deutsche Telekom were poised to reject Iliad's $15 billion bid for 56.6 percent of T-Mobile because it was too low. Interestingly, a separate Reuters report said Iliad is working with Dish Network, Cox Communications, Charter Communications and others to improve its offer for the "uncarrier."

Sprint has reportedly been eyeing T-Mobile for a number of months. SoftBank CEO Masayoshi Son was reportedly working on an offer of about $40 a share for T-Mobile, which would have valued the deal at about $32 billion.

Meanwhile the replacement of CEO Dan Hesse is surprising, considering last September the company extended Hesse's contract through at least July 31, 2018. Hesse is credited with ushering the company through several tough transitions. He took over the leadership of Sprint in 2007 as the company was spiraling into gloom, burdened with its disastrous acquisition of Nextel, with subscribers leaving in droves and customer satisfaction at all-time lows.

Hesse since has managed to negotiate SoftBank's acquisition of Sprint while also shutting down Nextel's iDEN network, overseeing Sprint's launch of LTE network technology, and guiding its acquisition of Clearwire.

But Hesse has also been criticized for his extremely lucrative compensation package of $49 million in 2013, making him the highest-paid executive in the wireless industry last year. Hesse has also overseen a network upgrade program called Network Vision that has resulted in customers leaving the carrier due to poor service. That program though is nearing conclusion, which means Brightstar's Claure will gain control of a carrier with a refreshed 3G CDMA network and a growing LTE network.

For more:
- see this WSJ article (sub. req.)
- see this Re/code article
- see this Bloomberg article

Related Articles:
Rumor mill: Iliad working with Dish, Cox, Charter and others to improve T-Mobile bid
Analysts: The benefits of an Iliad/T-Mobile deal are hard to see
Analysis: Iliad's $15B bid for control of T-Mobile puts pressure on SoftBank, Sprint to make a deal
France's Iliad makes $15B bid to purchase majority of T-Mobile US
T-Mobile's Legere: We don't need to make a deal to be successful
Orange CEO calls on rivals to drive consolidation in France
Advisory firm blasts Sprint CEO Hesse's $49M pay package

Article updated Aug. 5 with additional information. Mike Dano contributed to this report.

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