Sprint Said To Drop T-Mobile Bid; Will Name Claure CEO

At a board meeting yesterday, Sprint decided to give up on its plans to acquire T-Mobile and this morning will announce that Marcelo Claure, founder of wireless distributor Brightstar and a member of its board since January, will be taking the reins from CEO Dan Hesse, according to a report by the Wall Street Journal’s Ryan Knutson and Dana Mattoili that was quickly blind-sourced and analyzed by other news organizations. 

Neither company has confirmed the reports as of early this morning.

Although the No. 3 domestic mobile carrier’s wished-for acquisition of No. 4 T-Mobile was fraught with hitches from the get-go, Sprint “was reported to be on track to announce a deal in September,” write the Financial Times’ Ed Hammond and Gina Chon. It hoped to create an entity that would “compete with Verizon and AT&T in the increasingly megalithic landscape of telecom,” we pointed out in June as talks progressed.

The most formidable obstacle, it appears, was federal regulators’ reluctance to give an inch in their objections to the deal.

“Both the head of antitrust at the justice department, Bill Baer, and FCC chairman Tom Wheeler took the unusual step of publicly voicing their skepticism of such a transaction before a deal was on the table,” point out Hammond and Chon.

A $15-billion bid by French telecom Iliad for T-Mobile last week could not have helped the mood at yesterday’s board meeting. Iliad is in talks with other investors to improve its bid, anticipating a rejection of the offer by parent company Deutsche Telekom, sources told Reuters’ Sophie Sassard yesterday. 

Softbank founder, chairman and CEO Masayoshi Son made a $13- billion bid for Sprint in October 2012; a deal valued at $21.6 billion closed in June 2013 with SoftBank acquiring 72% of Sprint’s shares. 

Son, Sprint’s chairman, “rubbed some Sprint executives the wrong way, Knutson and Mattoili wrote, “and there has been a series of departures in the sales, marketing and network departments.”

Hesse has been Sprint CEO since December 2007. He “led a rip-and-replace overhaul to modernize Sprint's network but it caused cellular sites to go black and the company to hemorrhage subscribers,” according to Reuters’ Soyoung Kim, Marina Lopes and Yoshiyasu Shida.

Son is famously bold and bullheaded, as this recent video interview with Re/code’s Walt Mossberg amply demonstrates.

“Not known for backing down in the face of long odds — he once threatened to set himself on fire in a dispute with Japanese regulators — Mr. Son boasted that he could succeed similarly in the United States, despite facing bigger and more entrenched rivals,” writes the New York Times Michael J. de la Merced.

SoftBank acquired about 57% of Brightstar for $1.26 billion last October. “Claure, the founder of Brightstar, owns the remainder of the company, which controls billions of dollars in cellular gear purchases each year,” reports Re/code’s Ina Fried.

“Claure, who was born in La Paz, Bolivia, is perhaps the ultimate Miami success story: an immigrant who worked hard and since 1997 has built the third-largest private company in South Florida, with sales of $6.3 billion in 2012,” wrote Kevin Gale in a profile in the South Florida Business Journal at the time of the SoftBank deal. 

Claure, 43, graduated from Bentley College, now Bentley University, in Waltham, Mass., which describes itself as “one of the nation's leading business schools, dedicated to preparing a new kind of business leader and one with the deep technical skills, the broad global perspective and the high ethical standards required to make a difference in an ever-changing world.” 

Claure’s “career started while he was on a flight to Bolivia soon after graduating college,” Gale reported. “Claure was seated beside Guido Loayza, president of the Bolivian Soccer Federation, and the two began discussing fútbol. After ‘a long flight to La Paz and a few drinks,’ Loayza offered Claure the federation’s general manager position — with the goal of qualifying for the World Cup. They did.”

Claure now “has real-estate investments in Bolivia as well as education investments in Mexico, and is working with soccer star David Beckham on bringing a professional team to Miami,” report Bloomberg’s Olga Kharif and Alex Sherman.

Claure also owns the Bolivian soccer team Club Bolivar which, naturally, is sponsored by Brightstar. “Over the years, we’ve found that success in business is a lot like success on the soccer field,” says the company’s website. Claure had best don some lumberjack gear over the soccer kit in the coming months.

“They have a lot of wood to chop,” MoffettNathanson research analyst Craig Moffett told the New York Times’ de la Merced. “They will have to spend a fortune to fix their network, and they will very likely have to cut prices to stay competitive at the same time.”

Tags: telecom
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