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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wanlord 8/6/2014 | 10:58:43 PM
Re: Does this make T-Mobile more attractive? Except Rand Paul would allow wireless carriers and ISPs to decline services by race... Makes net neutrality really interesting if he gets his way and carriers can define different QOS levels based on demographics.... Sorry to bring it up, but somone started talking politics. 
MordyK 8/6/2014 | 10:48:39 PM
Re: Does this make T-Mobile more attractive? that's been happening for awhile, but low-band is simply in short supply and the mini-carrier's never really appreciated their value during spectrum auctions in the relatively spectrum-harmonized age of 1G, 2G & 2.5G.
DanJones 8/6/2014 | 10:31:26 PM
Re: Does this make T-Mobile more attractive? Yeah true i would expect a scramble for spectrum licenses and to buy up smaller carriers myself
MordyK 8/6/2014 | 10:07:10 PM
Re: Does this make T-Mobile more attractive? True Dan, but in terms of raw coverage and in-building penetration which is the customers general perception of service, the lower bands have no comparable equivalent.

As you know I am more that aware of small cells, but those simply augment the network and cannot act as a replacement or carriers would be put out of business by Wi-Fi, which they haven't.
DanJones 8/6/2014 | 9:58:46 PM
Re: Does this make T-Mobile more attractive? They still have to get 2.6GHz (the fast stuff) out of the big cities and into more areas though
DanJones 8/6/2014 | 9:55:52 PM
Re: Does this make T-Mobile more attractive? Very different regulatory environment with new govt appointments possible?
MordyK 8/6/2014 | 9:10:17 PM
Re: Does this make T-Mobile more attractive? Ray, I think the bigger issue here is quality spectrum, which Sprint despite its troubles has plenty of due to its acquisition of Nextel, whereas T-Mobile is chasing whatever morsels it can gather from a limited supply. So fundamentally I would say that despite appearances Sprint is in a more envious position given the right financial conditions, which Son/SOftbank finally brings.
mendyk 8/6/2014 | 5:09:17 PM
Re: Does this make T-Mobile more attractive? I'm not sure how a change in the White House will make Verizon and AT&T any easier for Sprint or T-Mobile to catch.
DanJones 8/6/2014 | 5:00:54 PM
Re: Does this make T-Mobile more attractive? Or just wait for new govt. in 2016? I doubt the FCC would change much under Hillary but Rand Paul (looks like Republican front runner right now), hell, ALL bets are off then.
mendyk 8/6/2014 | 4:51:43 PM
Re: Does this make T-Mobile more attractive? Dish would probably need help, or at least some creative financing. My semi-loaded question comes down to this: Would anyone want to buy into a market in which the prize is third place at best, and with the prospects of having a bloody price war with the other erstwhile No. 3?
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