Sprint CEO Claure takes the reins with great expectations - and challenges - ahead

Sprint (NYSE: S) CEO Marcelo Claure formally took the helm of the nation's No. 3 carrier on Monday and is faced with immense challenges and strong expectations from Sprint Chairman and SoftBank CEO Masayoshi Son, who has put his faith in Claure to turn Sprint around.

 Brightstar Corp. founder Marcelo Claure as its next CEO sprint


The biggest challenges for Claure will be to return Sprint to subscriber growth, especially in the postpaid segment, and likely introduce more competitive rate plans. Sprint is in the process of testing new pricing options and could unveil new plans before the end of the year.

All the while, Son will be watching Claure, and he noted last week that Claure built wireless-device distributor Brightstar Corp. into a $10.5 billion business "from scratch." Analysts see Son and Claure, fellow entrepreneurs, as more kindred spirits than Son and former Sprint CEO Dan Hesse. Son has called Claure a "street fighter" who has what it takes to turn Sprint into a more formidable force in the industry.

Those challenges will be especially acute now that Son has given up on his ambition to merge Sprint with rival T-Mobile US (NYSE:TMUS). In essence, Son wants Claure to do for Sprint what T-Mobile CEO John Legere has done for the No. 4 carrier: give it some punch and momentum in the market. Legere and his lieutenants have done that by branding the company the "uncarrier" and capturing millions of net new customers with aggressive pricing, brash marketing and offers such as paying off subscribers' early-termination fees.

"The question is can Sprint's new management under Claure remain aggressive and innovative and basically out-dance T-Mobile," Berge Ayvazian, an industry consultant at UBM Tech, told the Kansas City Star.

Son indicated Friday that "price competition will heat up," perhaps foreshadowing a pricing war in the U.S. market, but Claure seems to be planning for more than just that, according to comments reported by Wells Fargo Securities analyst Jennifer Fritzsche.

"When asked what the game plan is in terms of pricing, he would not offer specifics but mentioned it was more about value than price and said to expect Sprint to be 'aggressive,'" Fritzsche wrote in a note to clients about Claure's brief comments last week during the Sprint's online shareholders meeting, according to the Star.

She quoted Claure: "We need everyone who is looking to re-up with their current carrier to give Sprint a good hard look before doing so."

Claure, who was born in Bolivia, could also try to spark growth by focusing more on the Hispanic market. T-Mobile indicated in May that it would do so more aggressively by unveiling a partnership with Spanish-language broadcaster and media company Univision to launch its own branded MVNO, Univision Mobile.

Javier Palomarez, a former Sprint official who worked in corporate communications at Sprint in the early 2000s and now heads the United States Hispanic Chamber of Commerce, told the Star that Sprint needs to reach out to the Hispanic community more.

"Marcelo brings a unique set of skills, a unique cultural affinity and understanding of a market that heretofore Sprint hasn't really focused on," Palomarez said. "Marcelo will bring that walking in the door because he understands that market."

For more:
- see this Kansas City Star article
- see this WSJ article (sub. req.)

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