Light Reading

Hesse Out, Claure In: Sprint Is Son's House Now!

Dan Jones
8/6/2014
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With Dan Hesse out as CEO at Sprint and the installation of BrightStar's Marcelo Claure as the new boss, it is clear that parent company SoftBank is taking a firmer grip of the reins at the still-struggling US operator.

News of Dan Hesse's possible departure broke Tuesday night. A press release Wednesday morning made it official. (See Sprint Drops Bid for T-Mobile – Reports .)

Hesse joined Sprint Corp. (NYSE: S) in December 2007 to try and help fix the mess left by the Sprint Nextel merger. He is now exiting ostensibly because Sprint can't make a potential $32 billion merger with T-Mobile US Inc. happen. (See Sprint Appoints Claure As New CEO and Sprint Nextel's New Broom.)

Brightstar Corp. 's Claure got a seat on the Sprint board early this year after SoftBank Mobile Corp. 's $1.2 billion investment in the wireless distributor. He will take over as Sprint CEO on August 11. (See Brightstar Boss Gets a Seat on Sprint Board and Softbank Invests $1.26B in Brightstar.)

Those are the facts as they stand right now. Even parsing the language of the official press release on the appointment, however, gives little hints at more going on.


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"Marcelo has been a great addition to Sprint's Board and his entrepreneurial background, business savvy, industry experience and strong relationship with Masayoshi Son make Marcelo an excellent choice to lead Sprint going forward," Dan Hesse is quoted as saying in his exit statement.

We also know that SoftBank boss Masayoshi Son has previously vowed to be much more hands on in running Sprint and not repeat the mistakes of the past by leaving an American management to their own devices. Claure appears to be someone that Son can work with at the helm of Sprint. (See SoftBank's Son Keeps Sprint on Short Leash.)

After all, in the matter of acquisitions, the SoftBank CEO was easily as vocal as Hesse about a potential merger. For instance, he had this to say back in March:

    In order to fight back, we cannot be status quo. We have to change the situation, so it's not really four players becoming three. It's two players dominating the market, and we have to fight back.

Yet it was obvious that getting the regulatory approval for any merger was going to be tough. Some, meanwhile, had already started to wonder if hitching T-Mobile's fast-moving wagon to Sprint's donkey would help or harm the brand. (See Does T-Mobile Need Sprint to Scale? and Tough Road Ahead for Sprint/T-Mobile?)

In the short term, Sprint says that "Claure's first priority will be to continue the build out of Sprint's network by leveraging its strong spectrum holdings as well as ensuring that Sprint always maintains truly competitive offers in the marketplace." (See Sprint Promises 180Mbit/s 'Peaks' in 2015.)

"Expect capital spending to rise," say the analysts at Moffett Nathanson in a research note Wednesday. "They will also have to cut their service prices, which are simply are too high relative to competitors."

Doing this will make Sprint financials look "ugly indeed," the note warns.

The replacement of the CEO is also likely to restart chatter about Sprint moving headquarters to be closer to its Japanese parent, although Sprint specifically says in the release that Claure will be moving to lead from the current HQ in Overland Park, Kansas. (See Sprint: Heading to California?.)

As we have seen, however, things can change quite quickly in Son's house. In September 2013, SoftBank put Hesse's contract renewal on a five-year cycle, rather than reviewing it every year, as was done previously. He had been due to stay on as Sprint CEO through 2018. (See Sprint CEO Hesse to Stay On Through 2018.)

— Dan Jones, Mobile Editor, Light Reading

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jpolk84
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jpolk84,
User Rank: Light Beer
10/3/2014 | 10:35:14 AM
Re: Does this make T-Mobile more attractive?
re: "Except Rand Paul would allow wireless carriers and ISPs to decline services by race..."

This is silly. In principle, the notion that private entities should not be beholden to discrimination law has some merit. In fact, it's the law in some areas like religious entities, for example. (Which is a good thing. Imagine a Baptist church being forced to hire a priest.) But Rand Paul isn't going to advocate that businesses should be able to not allow black or asians or anyone else into their business.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
8/8/2014 | 7:03:20 PM
Re: Son rise
Has SoftBank been the ruin of many a poor boy?
DanJones
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DanJones,
User Rank: Blogger
8/8/2014 | 5:40:55 PM
Re: What could Hesse do next?
With that kind of severance package that's what I'd be sorely tempted to do for sure but who knows....
brooks7
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brooks7,
User Rank: Light Sabre
8/8/2014 | 4:58:52 PM
Re: What could Hesse do next?
Dan,

He could just retire and travel as well.

seven

 
DanJones
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DanJones,
User Rank: Blogger
8/8/2014 | 4:01:52 PM
What could Hesse do next?
I was wondering about this last night (yes, my life really is that exciting), what could Dan Hesse do next? Would he take on another CEO job or just board positions.
sam masud
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sam masud,
User Rank: Light Sabre
8/7/2014 | 1:47:20 PM
Re: Son rise
Yes, it's reputation, such as it is, in tatters. Understand it's considering moving HQ to N'orleans:-(
mendyk
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mendyk,
User Rank: Light Sabre
8/7/2014 | 1:34:18 PM
Re: Does this make T-Mobile more attractive?
The President gets nothing done without Congress. And we've already seen who runs that august body. That aside, I can't imagine any policy that would directly result in forced giveback of market share by Verizon and AT&T, especially from someone who is more laissez-faire than Adam Smith. At this point, Sprint and T-Mobile are well on the way to being locked into a grueling battle for No. 3, with almost no hope at this point to get even to second place. There's nothing intrinsically wrong with that, but it doesn't sound like something an outside buyer would be attracted to.
DanJones
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DanJones,
User Rank: Blogger
8/7/2014 | 1:23:52 PM
Re: Does this make T-Mobile more attractive?
I understand your position Mr D but -- on paper and in pronouncements -- Rand Paul's whole thing is that he is more lassiez faire than Adam Smith. If he gets to be the candidate and gets in -- and obviously that's a mighty big IF right now -- then it will specifically be on the promise of sweeping away as many government agencies and regulations as possible.

Of course, we all know what a presidential candidate's promises are worth but Paul is certainly a believer in this cause, as Wanlord points out.

Cases in point. Paul's lawsuit against the NSA & telecoms is apparently ongoing. He's claimed that the EPA has done more harm than good since its formation in 1970. That's really just the tip of the iceberg.

So yeah, I do think things could be different if he got in. No idea if that's a possibility right now but he's certainly being talked up as a candidate.
mendyk
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50%
mendyk,
User Rank: Light Sabre
8/7/2014 | 8:52:38 AM
Re: Does this make T-Mobile more attractive?
How would a change from Coke to Pepsi have any effect on Verizon's or AT&T's mobile reach or market share?
DanJones
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DanJones,
User Rank: Blogger
8/6/2014 | 11:14:08 PM
Re: Does this make T-Mobile more attractive?
In theory, Rand Paul could change many things radically, not sure he'll even be the candidate though but if he is and gets elected that could change the regulatory environment drastically. That was really my only point.
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