Sprint has dropped its bid to acquire the fourth biggest US carrier T-Mobile US after regulatory resistance showed no signs of softening despite months of lobbying, sources have told Reuters. 

The move is a rare setback for Sprint's Japanese parent SoftBank.

Its billionaire founder Masayoshi Son had seen the acquisition as key to taking on US market leaders AT&T and Verizon Communications. 

Sprint, the third biggest US carrier, and T-Mobile have not ruled out consolidation in the future but concluded that a deal is unlikely to be approved at this time, the sources said. 

US regulators have insisted that they want to keep the number of major wireless carriers at four. 

But the failure to reach a deal could give added impetus to a rival bid for T-Mobile by French telecoms firm Iliad. Iliad made a lower bid than Sprint but is in talks with US cable and satellite companies to sweeten its offer. 

In the wake of the failed talks, Sprint will appoint a new CEO - Marcelo Claure, founder of mobile phone distributor Brightstar which was acquired by SoftBank last year, a separate person with knowledge of the matter said. He will replace Dan Hesse who has been CEO of Sprint since 2007. 

SoftBank bought about 80% of Sprint last year for some $20 billion, just one of many aggressive acquisitions by Son who has built SoftBank from a small software publisher into Japan's second-most valuable listed company. He has vowed to make SoftBank the world's largest Internet media company. 

Sprint had agreed to pay $40 per share under the broad terms of an agreement worked out with Deutsche Telekom, T-Mobile's majority owner, following months of talks. 

By contrast, Iliad has so far offered only $33 per share for a 56.6%stake in T-Mobile. Possible partners to help it sweeten its bid include Dish Networks, Cox Communications and Charter Communications, sources have said. 

The announcement marks the second blockbuster deal to be abandoned this week after Rupert Murdoch pulled the plug on Twenty-First Century Fox's bid for Time Warner.