It's been a tumultuous 24 hours for the nation's third largest wireless carrier. Late yesterday reports circulated that Sprint (NYSE: S) not only had decided to abandon its bid to purchase T-Mobile US (NYSE:TMUS), but that it also was getting rid of long-time CEO Dan Hesse and replacing him with Marcelo Claure, a member of the Sprint board and the former CEO of Brightstar, a wireless phone distributor.
Sprint's decision to end its pursuit of T-Mobile was likely a wise one as various regulators with the FCC and Department of Justice had indicated they were not in favor of more consolidation among the Tier 1 wireless operators. But the sudden departure of Hesse, who has been a fixture at Sprint since 2007 and was praised for his ability to turn the company around after its horrific merger with Nextel, was surprising to me. Hesse is a long-time wireless industry veteran, known for being a strong and affable leader. And although he is no longer is featured in Sprint's advertisements as he was a few years ago, he still seems intricately tied to the operator.
Not much is known about Claure, other than he is a successful entrepreneur who started Brightstar in 1997 (when he was just 27 years old) and grew it into a $10.5 billion business by 2013. To say that Claure has a challenge ahead of him is an understatement. Sprint has been losing subscribers at a rapid rate: In the second quarter it reported a net loss of 220,000 customers, including 181,000 postpaid losses. In addition, Sprint has struggled to finish its Network Vision network upgrade project and to deploy LTE in order to compete against more nimble players like T-Mobile.
Sprint has said it is now moving forward with the next phase of its network, called Sprint Spark, which combines transmissions across Sprint's 800 MHz, 1900 MHz and 2.5 GHz spectrum to offer significantly faster download speeds. Sprint Spark is expected to cover 100 million POPs by year-end.
In a statement from Sprint, Claure said that in the short-term he will focus on competing aggressively in the marketplace and becoming cost efficient. In the longer term, he's going to look at growth and repositioning Sprint.
While Claure's challenge is big, the opportunity is even greater. Perhaps Claure will be able to do for Sprint what T-Mobile CEO John Legere has done for T-Mobile by cultivating an exciting new corporate culture and basically thumbing his nose at many of the ingrained wireless industry practices--like subsidized phones and two-year contracts.
I certainly hope Claure can return Sprint to its former self. I remember when Sprint first launched its nationwide PCS network in 1996: It was the upstart operator with a lot of fresh ideas that appealed to consumers--and it used that appeal to win new customers and steal existing ones from its competition.
But Claure will face some daunting tasks. First, he needs to rebuild Sprint's corporate culture and renew employees' faith in their company; many have been beaten down by Sprint's customer losses, its stalled network upgrades, and its lack of exciting new initiatives. Then Claure needs to win over consumers by refreshing Sprint's price plans and touting its network advances.
T-Mobile's Legere brought the "uncarrier" rockstar mentality to T-Mobile and its employees. Can Claure do the same for Sprint? --Sue