The Inside Story of How the Sprint and T-Mobile Deal Collapsed, Again

During months of merger talks with T-Mobole, Sprint Chairman Masayoshi Son sought a way to merge the two wireless rivals without really having to hand over the keys. There was discussion over inserting a provision to buy the combined company back after two years. The companies explored giving the Japanese billionaire the right to increase his stake over time. He was offered the role of co-chairman. In the end, nothing worked. The abrupt turn of events derailed a deal that many on Wall Street have anticipated for years, and that Son has long desired. The latest round of deal talks began to unravel in late October. The transaction that was being contemplated was an all-stock merger that would have given Deutsche Telekom control over the combined company and made T-Mobile Chief Executive John Legere the new firm’s head. Beyond having a voice as a major shareholder, Son wouldn’t be able to dictate the combined company’s direction. In recent weeks, disagreements over Sprint’s valuation also came to a head. Then, at an Oct. 27 board meeting in Tokyo, executives at SoftBank started questioning the fundamental logic of the deal. Son believes wireless connectivity is central to major businesses of the future, including robots and millions of devices. Sprint, therefore, is a strategically critical asset, they argued, so why give up control at all?