Sprint is abandoning its plans of buying T-Mobile due to regulatory concerns, news which is being met with support from regulators in the U.S.
Regulatory concerns seem to hint at the fact that the government essentially did not want to approve a merger of this kind. In fact, Federal Communications Commission Chairman Tom Wheeler said keeping four large carriers was "good for American consumers."
"Sprint now has an opportunity to focus their efforts on robust competition," Wheeler said in a statement. Along with other regulators, Wheeler has been public about his skepticism on a merger between the two carriers.
Reactions to the demise of the merger may carry through to other proposed mergers currently taking place in the communications industry, including Comcast's proposed deal for Time Warner Cable. In fact, many see the next step to ensuring that there is a competitive market as stopping the proposed buyout of Time Warner by Comcast.
Regulators in the U.S. have been clear for several years that they thought the wireless market was already too consolidated and that it would benefit from keeping four large carriers. The four large carriers in the U.S. are currently Sprint, AT&T, T-Mobile and Verizon.
In order to have mergers like the one that has just failed, carriers need to get permission from two different parties -- the Justice Department and the FCC. In 2011, the Justice Department filed a lawsuit that challenged AT&T's planned takeover of T-Mobile, saying that the deal would hurt consumers and lead to higher prices. At the time, Sprint supported the government's opposition to the deal, despite making similar plans only two years later.
In the event of the deal being approved, many consumers would have been affected, and prices for cellular coverage likely would have greatly increased.
There is some question about the future of the two cellular companies, considering their market share compared with carriers like Verizon and AT&T. Combined, T-Mobile and Sprint currently have less than a third of the market. Not only that, but shares in Sprint fell 15 percent after the markets had closed on Tuesday, while T-Mobile's shares fell almost 9 percent.
Both Verizon and AT&T are likely also celebrating Sprint's decision to abandon the T-Mobile acquisition. A team-up of Sprint and T-Mobile would have made a formidable adversary for both wireless leaders.
Despite this, Sprint is still expected to undergo some change in the coming months. The company announced Wednesday that it would get a new CEO, Marcelo Claure, as former CEO Daniel Hesse steps down. Claure is expected to make a number of rather large changes to the company in the coming months, with the weight on his shoulders to help grow the company to compete with the likes of Verizon and AT&T.
