Sprint did indeed confirm that it had dropped its bid for T-Mobile and was replacing longtime CEO Dan Hesse with Marcelo Claure yesterday, as anticipated, providing grist for analysts’ observations and material for T-Mobile’ CEO John Legere’s jibes at his erstwhile frenemy. Now they are clear rivals once again in the battle for the No. 3 position in the domestic mobile market.
The “always-colorful” Legere “seems to have plenty of opinions on his company's one-time suitor,” reports Ad Age’s Mark Bergen, in a battery of tweets [@JohnLegere] that, in the past “T-Mobile staff have insisted … are unscripted.”
“If you’re a @sprint customer, you’re in the middle of a #framilyfued and it’s time to up and go!” he tweeted. Then, a few minutes later, he posted: “Looks like @sprint has a new #framily member… and he’s got a lot of framily therapy to do, asap,” in an obvious reference to Claure’s appointment.
For his part, Claure “has the management experience, passion and drive to create the strongest network and offer the best products and services in the wireless industry,” Sprint chairman Masayoshi Son said in a statement.
Claure will resign his position as CEO at Miami-based Brightstar Corp., which he founded, effective Aug. 11, when he formally takes over at Sprint. Son’s SoftBank, which is based in Tokyo, will acquire Claure’s remaining interest in the company.
Legere predicted in a later tweet that T-Mobile would overtake Sprint in total customers by the end of the year. “There, I said it!,” he wrote, linking to a press release issued yesterday announcing that “the Un-carrier has overtaken rivals AT&T, Verizon and Sprint to become the No.1 U.S. wireless provider in the increasingly important prepaid mobile marketplace. “
But “T-Mobile US’s feistiness may have counted against” Son’s efforts to make the case that a combined Sprint and T-Mobile would present a more formidable challenge to No. 1 Verizon and No. 2 AT&T, observes the Schumpeter blog in The Economist. “The company has been a thorn in the side of AT&T, especially, with novel pricing plans and publicity stunts.”
As for Claure, his own sporting instincts may prove more valuable in meeting Legere’s challenge than any therapeutic capabilities he may possess.
“The charismatic Claure was so good at helping big companies gain market share that within six years, revenues reportedly jumped north of $1.2 billion,” reports Erin Carlyle in Forbes. “He also managed to force his two major competitors — public Cellstar and Brightpoint — out of Latin America entirely.”
But Sprint is a different kettle of challenges.
“Sprint is the clear loser here,” MoffettNathanson analyst Craig Moffett said in a note to clients quoted by Bloomberg. “Son and Sprint will need to refocus squarely on improving results internally, and that won’t be easy.”
That’s because “Sprint’s problems are largely structural, not cultural, Moffett said,” pointed out reporters Alex Sherman, Cornelius Rahn and Matthew Campbell, “questioning how much difference a new CEO can make.”
Adds Tokyo-based Yoshihiro Nakatani, a senior fund manager at Asahi Life Asset Management: “If Sprint can’t buy T-Mobile, it will be difficult for Sprint to do business. I’m concerned about Sprint’s operations.”
But for all of Legere’s crowing, “T-Mobile will have to weigh the merits of a deal with another suitor against going it alone in a market that is about to get a lot more competitive and a lot more expensive,” write Thomas Gryta and Sam Schechner in the Wall Street Journal.
While it “has added more than four million lucrative postpaid customers over the past six quarters,” they point out, “those gains are coming at a cost. T-Mobile is paying subscribers' termination fees when they switch, and a looming spectrum auction will require big outlays of cash if the company is to remain competitive.”
Paris-based Iliad, which last week made its own $15-billion bid for T-Mobile US, took the news as a positive and “plans to forge ahead with its surprise bid … to buy 56.6% of T-Mobile, despite objections from the company that Iliad's offer was too low,” a source told the WSJ’s Schechner in a separate story.
Meanwhile, Dish chairman Charlie Ergen said yesterday’s developments “opened up more options for his satellite-TV carrier as it looks for ways to expand into the wireless business,” Caitlain McCabe reports in Bloomberg Businessweek.
“While he said Dish remains interested in T-Mobile, Ergen also lauded Sprint, which he said has a better network and has potential to expand. The odds are low of a deal with anyone before the government’s spectrum auction in November, he said.”