The Sprint Corp (NYSE:S) deal to merge with T-Mobile US Inc (NASDAQ:TMUS) has fallen through, sending Sprint stock plummeting, with the Sprint Corp deal failure unlikely to derail the trend of job cuts at Sprint.
Following another Hail Mary attempt to try and rescue the company from debt, the Sprint Corp deal with T-Mobile failed, sending investors fleeing from the company after their hopes for a wireless megamerger were dashed.
While no job cuts were announced following the deal’s failure, Sprint has long been saddled with large amounts of debt and little in the way of options. The company has not had a profitable year in a decade, with job cuts coming as a result over the past several years, sometimes measuring in the thousands.
The company employed 40,000 people in 2011, but that number has fallen every year since, tumbling down to 28,000 in 2016.
Despite the Sprint Corp deal failure, Chairman Masayoshi Son attempted to paint an optimistic portrait of the future.
“Even if the next three-four years will be a tough battle, five to 10 years later it will be clear that this is a strategically invaluable business,’’ Son, 60, said at a briefing after announcing SoftBank’s quarterly earnings. SoftBank Group Corp (OTCMKTS:SFTBF) is the majority owner of Sprint and Son said it will boost its stake in the company.
The deal ultimately came down to a disagreement over how ownership of the combined company would be handled. When neither side could come to an agreement, the deal was dead.
“There was just a line we couldn’t cross,” Son, 60, said at a briefing after announcing quarterly earnings. “And that’s how we arrived at the conclusion.”
Sprint has already laid off thousands of employees over the past few years, with a round of cuts hitting 2,500 workers in January 2016. If the company continues to mark quarter after quarter of losses, that trend is unlikely to turn around, with debt increasing and the company’s future prospects dimmer following the Sprint Corp deal collapse.
“Sprint Plunges After Merger Talks With T-Mobile Collapse,” Bloomberg, November 6, 2017.
“Sprint Corporation number of employees from 2011 to 2016,” Statista, 2017.