Deutsche Telekom (>> Deutsche Telekom) ended talks on a merger between its T-Mobile US (>> T-Mobile US) business and Sprint Corp (>> Sprint Corp) because it would not have created value, CEO Tim Hoettges told staff after the deal collapsed at the weekend.
Hoettges said he flew 50,000 km in seven days to try to save the deal, meeting Masayoshi Son, head of Sprint owner Softbank Corp (>> SoftBank Group Corp), at his private home in Tokyo only for the two sides to decide against a deal.
"In the end, it is always about creating value for shareholders. Our impression was that this did not work out," Hoettges wrote in a blog post to staff that was seen by Reuters.
The deal would have created a business with 130 million customers - a close third behind AT&T (>> AT&T) and Verizon (>> Verizon Communications).
Alone, T-Mobile has 70.7 million customers and although it has added more than a million subscribers for 18 quarters in a row it will take a long time to close the gap.
T-Mobile has invested more than $40 billion in the last six years to scale up its operations, but without Sprint's spectrum portfolio faces further spending as U.S. telecoms players gird for the rollout of 5G services, analysts say.
Hoettges said day-to-day control and respective ownership of the merged entity; valuation; financing; and regulatory issues had all been important issues throughout the talks on bringing T-Mobile and Sprint together.
"On the basis of these four points, we together decided against a merger," he said. "This decision was not easy for us, we struggled hard. But on the other hand, I have always said: We don't do bad deals."
Shares in Deutsche Telekom were slightly higher after shedding 2.6 percent on Monday. It reports third-quarter results on Thursday.
(Reporting by Douglas Busvine; Editing by Keith Weir)