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4G/3G/WiFi

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

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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DanJones 8/6/2014 | 12:50:58 PM
Wonder if there will be more changes at the top? I wonder if there will be more executive changes at Sprint now, seemed like there had already been a clean-out at the top. Any more for anymore?
[email protected] 8/6/2014 | 12:51:28 PM
Does this make T-Mobile more attractive? As Sprint scrambles, does this make T-Mobile more attractive to an overseas buyer looking for a piece of the action in the US market?

T-Mobile already has momentum, and could make some real gains between now and the end of the year as Sprint reorganizes....
DanJones 8/6/2014 | 1:25:12 PM
Re: Does this make T-Mobile more attractive? Possibly, my sense from the last Q2 call is that the T-Mob team already knew that Sprint was no deal.

I think would drive a hard bargin in terms of price and keeping the current management in place with any potential acquisition. If it was $32B last time why not $36B or more next?
Mitch Wagner 8/6/2014 | 1:33:30 PM
Son rise Sprint is the house of the rising Son now, then?

(According to Google we have never used this headline. Shocking!)
zorank 8/6/2014 | 1:56:41 PM
Re: Wonder if there will be more changes at the top? What about the network side? This is not just about operating in me-too mode: to succeed they need to jump over (or at least be as good as) their competitors. This means everything from the RAN through to support and sales needs to be made much better. On the network side, they need a team that has a clear vision and the stamina to cut through the legacy mindset.
DanJones 8/6/2014 | 2:20:21 PM
Re: Wonder if there will be more changes at the top? Stephen Bye is CTO and John Saw was recently hired as Chief Network Officer not sure there will be changes there. The CEO announcement made it clear that Claure's top priority is getting the network in fighting shape.

The issue is going to be, how much can they spend to address that without spooking investors?
DanJones 8/6/2014 | 2:20:27 PM
Re: Wonder if there will be more changes at the top? Stephen Bye is CTO and John Saw was recently hired as Chief Network Officer not sure there will be changes there. The CEO announcement made it clear that Claure's top priority is getting the network in fighting shape.

The issue is going to be, how much can they spend to address that without spooking investors?
mendyk 8/6/2014 | 2:39:32 PM
Re: Does this make T-Mobile more attractive? Ray -- Any thoughts on who the interested party or parties might be? Anyone would be hard-pressed to make a run at the top two. So this essentially becomes a contest for third place, at least for the foreseeable future.
DanJones 8/6/2014 | 3:03:00 PM
Re: Son rise Its mostly been the house of the setting son so far... that's why!
mhhf1ve 8/6/2014 | 3:03:11 PM
Sprint's acquisition record... Sprint has had some problems integrating non-compatible wireless networks, so I wonder how they would have integrated T-Mobile's customers to its incompatible network, anyway...  

I think the various MVNOs that would have disappeared if this deal actually succeeded would have been disturbing to the wireless market. So the regulators were probably right to hint that they were against this combination that would have likely reduced competition.
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