Sprint's Hesse points to blocking AT&T/T-Mobile as turning point in tenure

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Sprint Nextel (NYSE:S) CEO Dan Hesse is celebrating five years on the job this week, and looking back he points to his decision to move against AT&T's (NYSE:T) proposed $39 billion purchase of T-Mobile USA as the most pivotal moment so far in his time at the top of Sprint.

In an interview with GigaOM, Hesse reflected on his tenure, including his wins and losses as CEO, as well as the future direction of the nation's No. 3 carrier. Hesse has taken Sprint from the lowly depths of the end of the Gary Forsee era to a point where the company, while still losing money, is on a more sustainable path and has received a $20.1 billion investment from Softbank. As he has in the recent past, Hesse acknowledged that Sprint is not all the way back, and that it still has a long way to go.

"The most important decision that has been made in the five years I've been here was the decision to fight the acquisition of T-Mobile by AT&T," Hesse said. "It fundamentally defined the industry, which in turn defined Sprint in terms of who we are is and what our role in the industry is."

Hesse said that if the AT&T deal had gone through, the U.S. wireless industry would have been a duopoly between AT&T and Verizon Wireless (NYSE:VZ). The opposition to the deal did not clinch its demise--the Department of Justice sued to block it on antitrust grounds and the FCC also signaled its opposition--but Sprint's lobbying surely helped pave the way. And in the process, Hesse said, Sprint became more closely aligned with smaller carriers and also opened up itself to future opportunities.

"Investment into the U.S. wireless industry would dry up if you had a government sanctioned wireless duopoly," Hesse said. "Softbank has said publicly it wouldn't have invested a thousand dollars in the U.S. if that merger had gone through."

The five-year mark for Hesse comes at a critical time for Sprint. The company is in the midst of a multibillion-dollar Network Vision network modernization project. It is in process of getting regulatory approval for Softbank to buy 70 percent of the company. And Hesse just announced that Sprint will buy partner Clearwire for $2.2 billion as it continues its march through its own LTE deployment.

Looking back, Hesse acknowledged that the decision to merge Sprint with Nextel was clearly wrong. He said it is too early to also call Sprint's early bet on Clearwire's mobile WiMAX technology a mistake as well, noting, as he has in the past, that it gave Sprint a leg up on 4G, though Verizon quickly caught up in terms of LTE coverage. "Time will tell," Hesse said. "It's too early to say whether [WiMAX] was a good call or a not so good call."

Hesse said that Sprint will continue to try to differentiate itself from Verizon and AT&T, but that it still faces an uphill climb in getting non-Sprint customers to see how much the company has changed in the past five years. The company's customer satisfaction ratings have gone from worst to best in the industry, but that it takes time to regain market share.

"A brand can be tarnished very quickly, but it takes a long time to rebuild it," Hesse said. "That's the issue we had. The company had let the customer service and customer experience deteriorate, and we really have to work hard to change that perception.…We have changed the perception of Sprint customers very quickly because they have noticed how much we've improved. It's more difficult to change the perceptions of non-customers."

For more:
- see this GigaOM article

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