Sprint throws in the towel in bid to buy T-Mobile

Sprint had hoped to combine forces with T-Mobile to bulk up enough to challenge the two bullies on the beach, AT&T and Verizon. But it’s looking like Sprint will remain a third-place weakling.

The WSJ reports that Sprint, the third largest wireless carrier in the U.S., is abandoning its bid to buy T-Mobile, the fourth largest U.S. wireless carrier.

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Since Sprint announced that it had designs on T-Mobile last spring, doubts had grown about the deal’s chances of making it past regulators. Others had expressed doubts about how well the two carriers’ core cellular technologies might mesh (read: not very well).

Reports have said that Sprint will pay a break-up fee of between $2 billion and $4 billion to T-Mobile if the deal doesn’t go through.

The news comes on the heels of the French carrier Illiad (which does business as Free) making a surprise $15 billion offer for T-Mobile last week.

But even that deal is looking shaky today. Multiple reports say that T-Mobile is going to reject Iliad’s initial offer of $33 per share for a 56.6 percent stake in the company.

AT&T and Verizon have dominated the cellular market in the U.S. over the past few years, while Sprint has fallen further behind in subscriber base and core network technology.

T-Mobile has been aggressively pricing its services and has gained some market share as a result (mostly by taking subscribers from Sprint), but lags far behind both AT&T and Verizon in subscriber base.