If Softbank buys T-Mobile, will it remember the old John Legere as it deals with the new version?

Dan O'Shea, Analyst, Heavyreading.com

January 27, 2014

5 Min Read
Is SoftBank Ready to Reunite With Legere?

I've found it entertaining to watch the "Cult of John Legere" develop in the last year and a half, though maybe not for the same reasons as the mobile industry insiders who see the outrageous and outspoken T-Mobile USA CEO as an abrasive change agent for an ossified marketplace.

One of the most interesting aspects of Legere's rise as the wireless industry's new rebel saint has been how little, if at all, anyone has mentioned his telecom past. Legere's past reads pretty differently from his current image. It is worth thinking about, amid the growing possibility that SoftBank Corp. could buy T-Mobile US Inc. and merge it with Sprint Corp. (NYSE: S), and possibly even put Legere in charge of the whole thing. (See Report: SoftBank Preps $19B Bid for T-Mobile.)

I followed Legere a little more closely about 10 to 12 years ago, when he emerged as the somewhat unlikely savior of the struggling wholesale fiber network operator Global Crossing (Nasdaq: GLBC). He was then one of a throng of freshly minted CEO candidates from the AT&T Inc. (NYSE: T) school of management, along with Joe Nacchio, Rick Roscitt, Alex Mandl, and Dan Hesse, among others. Legere had risen quickly through AT&T's Asia operations and eventually moved to Asia Global Crossing (AGC), a joint venture between Global Crossing, Microsoft Corp. (Nasdaq: MSFT) and -- here's the bit with present resonance -- SoftBank.

Could that past affiliation with SoftBank help grease the wheels for a deal in which the Japanese giant would buy T-Mobile and merge it with Sprint? I don't know how much of a direct relationship Legere had with SoftBank founder Masayoshi Son, but Legere's general experience working for Asia-focused telecom operations and any other involvement he had with SoftBank folks while at AGC must be worth something, right?

Yet, many past published reports suggest that after Legere won the CEO job at Global Crossing a few months before that company would file for bankruptcy in early 2002, his relationship with the AGC board may have soured. Meanwhile, he came under heavy criticism while in charge of Global Crossing. (See Global Crossing Falls Overboard and GlobalX: The Burst Bubble.)

Why? I'll let you delve into the Los Angeles Times story I linked to above for the juicy details, but here are a couple worth repeating:

  • Shortly before Global Crossing went into bankruptcy protection, Legere reportedly demanded the company pay taxes on $10 million worth of loans that had been extended to him from AGC and subsequently forgiven -- even as other employees who had been shown the door lost their severance payments.

  • Controversially, he simultaneously remained chief executive of both Global Crossing and AGC, and reportedly kept the latter from tapping into a $400 million line of credit from Global Crossing that might have saved AGC from its later bankruptcy filing.

  • Legere reportedly used $500,000 of company money from Asia Global Crossing without first obtaining board approval to settle three sexual harassment suits against him.

There's more, and none of it is new information, but a view of Legere's history that more people should be aware of before they canonize him.

T-Mobile's hero or heretic?
I don't know what has changed personally for Legere that he comes off so differently now, but it seems so rightly suited to T-Mobile's situation -- a company in last place has nothing to lose -- that it's a little hard to believe it's genuine. When you're in T-Mobile's situation, "outrageous and outspoken" is your best way to change perceptions.

A consumer-facing company, unlike Global Crossing back in the day, also requires public demonstrations of customer care, and it helps to be less of a Ma Bell suit-wearing intimidator, and more like someone's casual, foul-mouthed jokester uncle. So, that's what Legere is delivering now.

Does that mean he isn't fully invested in what he's saying or the actions he's taking at T-Mobile? Not at all. Legere took the reins of Global Crossing just before it filed for Chapter 11. He led it back out and stuck with the company for several more years before selling it to Level 3 Communications in April 2011 for $2 billion. In business, that's the definition of a winner. That's exactly what T-Mobile needs to be something other than fourth choice, or to achieve what is probably Legere's more likely endgame -- a sale. (See Level 3 Buying Global Crossing.)

Maybe I'm wrong about Legere. Maybe he's a reformed suit who made it through more than one industry crash by the skin of his teeth and now just wants to strike back at the type of market-choking evil empires that produced the old John Legere. Maybe he is just as pure of heart as some people seem to think he is. To be clear, there were many more people of more questionable character than Legere in the telecom industry a decade and a half ago. Heck, even just inside Global Crossing there were more.

Will SoftBank look past the negative aspects of Legere's time at Global Crossing if it buys T-Mobile? Could the Japanese giant even welcome him back into the fold with open arms and a bigger job?

If SoftBank's business philosophy is something like, "Embrace the devil that you know," then perhaps.

— Dan O'Shea, Managing Editor, Light Reading

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About the Author(s)

Dan O'Shea

Analyst, Heavyreading.com

You want Dans? We got 'em! This one, "Fancy" Dan O'Shea, has been covering the telecom industry for 20 years, writing about virtually every technology segment and winning several ASBPE awards in the process. He previously served as editor-in-chief of Telephony magazine, and was the founding editor of FierceTelecom. Grrrr! Most recently, this sleep-deprived father of two young children has been a Chicago-based freelance writer, and continues to pontificate on non-telecom topics such as fantasy sports, craft beer, baseball and other subjects that pay very little but go down well at parties. In his spare time he claims to be reading Ulysses (yeah, right), owns fantasy sports teams that almost never win, and indulges in some fieldwork with those craft beers. So basically, it's time to boost those bar budgets, folks!

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