Sprint's Claure intends to cut costs, compete aggressively on price

Sprint (NYSE: S) CEO Marcelo Claure said the company will look to cut costs and compete aggressively on price as it tries to regain momentum in the market following its plans to scrap a merger with T-Mobile US (NYSE:TMUS). Claure, who took the helm on Monday, will hold a town hall meeting with Sprint employees Aug. 14 to outline his vision for the company, according to a leaked internal memo that was reported by several news outlets.

"In the short term, our success will come from our focus on becoming extremely cost efficient and competing aggressively in the marketplace," Claure wrote in a memo obtained by Bloomberg. "The management team has been working closely with the board to outline the future strategy of the company." Claure expressed similar views in a statement last week when he was first named CEO. 

According to the Kansas City Star, which also obtained the memo, Claure said he will use the meeting to "share my thoughts and vision for making Sprint the wireless carrier of choice."

Claure did not specifically address how Sprint will become more cost efficient, but analysts expect that his plan will likely include job cuts as well as efficiencies in network spending and phone-based customer service. Sprint had around 36,000 employees at the end of March. 

"I'm not sure how they would be able to significantly cut costs without looking at labor costs and their overall headcount," David Heger, an analyst at Edward Jones, told Bloomberg. "The business is labor-intensive."

In response to the speculation, Sprint spokeswoman Roni Singleton told the Kansas City Business Journal: "This is only day two for our new CEO, so it's still early to discuss specifics around cost efficiencies. But in the course of business, Sprint both adds and reduces it workforce based on business needs and market conditions."

Claure did not specifically mention the aborted bid to merge with T-Mobile, but he clearly alluded to it in his memo. "You have probably seen the many media reports speculating about Sprint's future," he wrote. "As I have already said, consolidating makes sense in the long term but, for now, we will focus on growing and repositioning Sprint."

Sprint is likely going to introduce more competitive rate plans at some point later this year. The carrier is in the process of testing new pricing options and could unveil new plans in the fourth quarter in time for the holiday shopping season. Sprint has promised to return to postpaid subscriber growth in the fourth quarter but has seen its subscriber losses continue as a result of its network upgrades and intensified price competition.

Claure, who is moving with his family to near Sprint's headquarters in Overland Park, Kan., said in the memo that Sprint faces "challenges and opportunities" and that "some of them are significant."

Claure also recognized former Sprint CEO Dan Hesse's contributions, noting that he "guided this company through some difficult challenges and positioned it as a leader in sustainability and corporate responsibility."

For more:
- see this Bloomberg article
- see this Kansas City Star article
- see Kansas City Star article

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