Economy
10:32 am
Wed August 6, 2014

Sprint Replaces CEO, Says It Will Remain Competitive

Sprint's headquarters, located on a 200-acre campus in Overland Park, Kan.
Sprint's headquarters, located on a 200-acre campus in Overland Park, Kan.
Credit Julie Denesha / KCUR

Sprint Corp. announced a shake-up at its Overland Park-based headquarters Wednesday, ousting CEO Dan Hesse amidst a reported change in plans in its $32 billion bid for T-Mobile.

Replacing Hesse will be Marcelo Claure, a Bolivian businessman who founded Brightstar Corp., a Florida-based wireless services company that is a subsidiary of SoftBank, the Japanese company that owns Sprint.

Claure, 43, will replace Hesse, 60, effective next Monday, according to a Sprint announcement.

The announcement hinted at published reports that Sprint, the No. 3 largest U.S. carrier, was dropping its merger of T-Mobile, in the No. 4 spot,  because executives feared U.S. anti-trust regulators wouldn’t approve the deal. Claure’s first priority would be building out the company’s network and “ensuring that Sprint always maintains truly competitive offers in the marketplace,” the announcement said.

Sprint Chairman Masayoshi Son had been optimistic on the T-Mobile merger, even going so far as to say he felt it could pass muster with the Federal Communications Commission. But on Friday, the FCC announced a plan to bar companies from jointly bidding on wireless spectrum, the airwaves that carry cell calls and data.  That move was seen as directly aimed at the Sprint-T-Mobile deal.

Wednesday, just after the Sprint announcement, the FCC chairman commented on the news, in what the Wall Street Journal characterized as “unusual.”

The comments were unusual given Sprint had never announced a deal and has only obliquely said that its efforts to buy T-Mobile have come to an end. But they capped an unusually aggressive series of steps by regulators that seemed aimed at heading off the combination.

"Four national wireless providers is good for American consumers," Federal Communications Commission Chairman Tom Wheeler said in an emailed statement. "Sprint now has an opportunity to focus their efforts on robust competition."

Son, an outspoken critic of U.S. regulations who has said he wanted to compete with the top two wireless carriers, Verizon and AT&T, reiterated Wednesday that Sprint will continue to compete.

“While we continue to believe industry consolidation will enhance competitiveness and benefit customers, our focus moving forward will be on making Sprint the most successful carrier,” Son said.

Claure echoed those sentiments, saying in the release that he would mobilize the company to “become the wireless carrier of choice in the U.S.”

“In the short-term, we will focus on becoming extremely cost efficient and competing aggressively in the marketplace,” he said. “While consolidating makes sense in the long-term, for now, we will focus on growing and repositioning Sprint.”

The Kansas City Star, citing a company filing with the U.S. Securities and Exchange Commission, reported that Claure will be paid $1.5 million a year in salary, on top of a $500,000 signing bonus.

Hesse was paid $1.2 million salary last year as part of a total compensation package valued at up to $49 million, the Star reported.

Hesse had advocated for the T-Mobile deal, saying he thought consumers would be better off with a stronger third-place carrier. But he also told KCUR’s Steve Kraske in June that he would be fine to end his tenure as Sprint’s CEO and that his life held a lot of possibilities.

“There’s running other companies — you can see my passion around digital music. There is lots to do in that arena. There’s boards of directors, there’s travel,” he said. “When I start thinking about it, there’s you know, I want the next decade of my life to just to be wonderful and there’s lots of great choices.”

In the Sprint release, Hesse was quoted as saying Claure was an excellent choice to lead Sprint.

“I’m proud of the resilience of Sprint’s people during a difficult transformation and I’m optimistic about how they will build on a foundation of innovation to succeed in the future,” Hesse said. “It’s been an honor to have led such dedicated teammates for more than six-and-a-half years.