Stories of the Year: After merger fizzles, Sprint changes CEOs, downsizes

For much of 2014, Sprint seemed dead set on acquiring with T-Mobile. But acquisition talks fizzled, and Sprint’s CEO lost his job, along with several thousand of the company’s employees.

The merger saga was just one aspect of a tumultuous and unprofitable year in which the Overland Park, Kan.-based telecom company tried to cut costs and increase its market share as it faced increased competition from T-Mobile and slashed its prices to lure customers from Verizon and AT&T.

Read more: Check out the rest of Missouri Business Alert’s Stories of the Year for 2014.

Serious talks about a possible merger between Sprint, the nation’s third-largest wireless provider, and T-Mobile, the fourth-largest provider, surfaced in March after persistent rumors. Throughout the spring and summer, Sprint’s parent, Toky0-based SoftBank Corp., aggressively pursued  T-Mobile with the deal estimated to be worth about $32 billion. Analysts said the merger would save the wireless companies, both of whom are vastly outnumbered by market leaders Verizon and AT&T.

Unions representing communications workers spoke out against the merger, claiming that decreased competition would result in the loss of thousands of communications jobs. Regulators at the Justice Department and Federal Communications Commission were concerned about the impact increased consolidation would have on wireless consumers.

The deal fell apart in August, reportedly stalling over disagreements about financing and a drop-dead date for the merger. The failure cost CEO Dan Hesse his job, but his was just one of many cut by SoftBank throughout the year.

Sprint reduced its workforce by 5,000 employees between December of 2013 and October of 2014. The cuts hit the company’s headquarters particularly hard. Two-hundred jobs were lost in March when Sprint closed its Overland Park call center, and the cuts got worse later in the year. In October and November, Sprint laid off 910 employees at the Overland Park office, which was 54 percent of the 1,700 layoffs during that time. The job cuts began with 33,000 on Sprint’s payrolls, including 7,500 in the Kansas City area.

The cuts were intended to save the company $1.5 billion after it announced disappointing earnings for the second quarter.

Throughout the year though, Sprint was rumored to be creating an aggressive price plan to compete more with Verizon and AT&T. On Dec. 2, new CEO Marcelo Claure announced a new promotion that cuts wireless bills in half for Verizon and AT&T customers that switch to Sprint. Analysts said the move was bold because it could pay off, but it does make it harder for the company to turn a profit on those customers.

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