Sprint's Claure: 'You ain't seen nothing yet' in terms of value message

Sprint (NYSE: S) CEO Marcelo Claure said "you ain't seen nothing yet" in terms of how aggressively and clearly Sprint intends to push its message that it offers the best value in the U.S. wireless market. Claure indicated that new executives will be joining the company in the next 60 to 90 days to replace ones who are leaving, and said that while "it's just the beginning of a very long journey" he is encouraged about the carrier's turnaround prospects.

Speaking at the Wells Fargo Technology, Media & Telecom Conference, Claure outlined the three pillars of Sprint's new corporate identity: offering the best value in wireless, being the easiest wireless carrier to do business with, and providing a consistent and reliable network experience.

"Best value doesn't mean you are going to be the cheapest," he said. "Best value means the customer is going to get their money's worth. ... I can tell you, you ain't seen nothing yet."

Claure said that within the next two to three weeks Sprint will be rolling out new advertising that hits that message home with clear examples. "If you can listen or read it will be very, very clear," Claure said.

Since taking over from Dan Hesse in August, Claure killed Sprint Framily plans, which he admitted were a failure, and replaced them with shared data plans that offer twice the amount of data when compared with similar plans from Verizon and AT&T Mobility (NYSE: T). For individuals, Sprint is offering unlimited data plans that are $20 less expensive than similar plans from T-Mobile US (NYSE:TMUS). Still, Sprint lost 336,000 total retail postpaid subscribers during the third quarter, the company's 11th straight quarter of postpaid subscriber declines.

Sprint had more customers with sub-prime credit than he realized or would have liked when he arrived, Claure said, adding that Sprint has tightened its credit standards. "I would rather miss my net add projections than loosen credit standards to get more customers into the systems," he said.

So far, Claure said the plans are starting to produce results. In August Sprint had just 10 percent of gross subscriber additions in the industry and was "not even part of the conversation."

In September that figure climbed to 16 percent, he said, calling it "an incredible swing." He said Sprint became net-port-positive in September (meaning more customers were coming in than leaving), and that sales in the month grew 30 percent year-over-year.

"It was a good September and October," Claure said. "If you are able to put the right offer in front of consumers, consumers will react."

Claure said that the market is "going to see us attract and retain great talent" over the next 60-90 days, and said he would be bringing in executives who would form a new core management team that is excited to compete in the U.S. wireless market. Although he did not name any specific executives, Claure said there are a "few folks who are going to be leaving the company" but that Sprint is actively recruiting replacements and is finalizing the new team.

Sprint will continue to simplify its offers and will be launching fewer promotional ones and more permanent offers, as T-Mobile has done with its "uncarrier" initiatives. Claure said that today Sprint offers the best value in wireless but has not done a good job of communicating that.

"The brand was very weak. And it continues to be very weak," Claure admitted. "It's been a very long time since the brand stood for something."

Claure touched on the company's plan to save $1.5 billion through cost cutting, including slashing 2,000 jobs. Claure said that the $1.5 billion should not be viewed as a "one-time" cost reduction measure but a precursor to a new way of doing business more efficiently.

Claure also noted that Sprint now has one centralized procurement system compared to a dizzying array of systems before, and that he has hired Frank Boyer, who was formerly senior vice president and chief supply officer of Cingular Wireless, to be Sprint's new chief procurement officer. Simplification, Claure said, will yield cost savings.

The Sprint chief also talked about Sprint's network, which has long been a sore sport for customers. Claure said that the hardest part of Sprint's network transformation is behind the company. That included upgrading all Sprint's base stations to new multi-mode equipment, which led to degradations in service before improvements. "The rip and replace was traumatic experience for Sprint and Sprint customers," he said. Now that Sprint has passed that first phase, Claure said, the company is focusing on expanding the deployment of its 800 MHz and 2.5 GHz LTE.

Sprint now covers a little more than 50 percent of its total LTE footprint with 800 MHz LTE and will complete its 800 MHz LTE buildout next year, which Claure said is improving the in-building penetration and overall LTE coverage of the network.

Sprint also recently hired Junichi Miyakawa from parent SoftBank to be its new network chief. Claure noted that SoftBank in Japan "built one of the best networks in the world" using 2.5 GHz spectrum and Sprint wants to replicate that.

"We are going to continue with 2.5 deployment," he said. But rather than turning up 25 markets at once Sprint is going to deploy the technology in four or five markets at a time and ensure it is delivering a solid experience in those areas. "We need to make sure we fix our basics while at the same time continuing our LTE deployment," he said.

Sprint has historically ignored Wi-Fi in its network, Claure said, and the company plans to make Wi-Fi "an important part of our network going forward."

Claure said that Sprint customers are leaving not because Sprint is not deploying 35 Mbps LTE, but because they are dropping calls or can't initiate a data session. "You can affect churn significantly if you are able to meet the basics," he said.

Still, Claure acknowledged the challenges Sprint faces. In the first three quarters of 2014 Sprint lost 1.8 million handset customers, he said, after losing 1.3 million in all of 2013. That is going to hurt Sprint's revenue and earnings in 2015, he said. Sprint needs to simplify its offers and messaging and cut churn, Claure said. "We are going to run this company to create long-term value," he said, adding, "We are managing the company for growth. We have to."

Claure also said his relationship with SoftBank CEO Masayoshi Son is "great" and that the two talk once a day, sometimes for a few minutes or sometimes for hours. He said SoftBank is willing to provide Sprint with the resources it needs to succeed but that Sprint has not had to ask SoftBank for direct financial help. "People shouldn't underestimate how important Sprint is to Masa due to the fact that this is the largest investment he has ever made," adding that Son "wants to make sure Sprint is a great company."

For more:
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Sprint names SoftBank executive Miyakawa as its new network chief
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