Sprint names new CEO after dropping T-Mobile bid - KCTV5

Sprint names new CEO after dropping T-Mobile bid

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Marcelo Claure, the CEO of cell phone distributor Brightstar, will replace Dan Hesse on Monday, Sprint Corp. said Wednesday. (AP Photo/Lynne Sladky) Marcelo Claure, the CEO of cell phone distributor Brightstar, will replace Dan Hesse on Monday, Sprint Corp. said Wednesday. (AP Photo/Lynne Sladky)
OVERLAND PARK, KS (KCTV/AP) -

Sprint's new owner is replacing its longtime CEO after dropping its bid for rival wireless carrier T-Mobile US.

Marcelo Claure, the CEO of cell phone distributor Brightstar, will replace Dan Hesse on Monday, Sprint Corp. said Wednesday.

He will be based at Sprint headquarters in Overland Park and plans to relocate to the Kansas City area.

Claure, 43, had been CEO of Brightstar Corp., which is part of Softbank Corp. of Japan. Softbank bought 70 percent of Sprint last year.

Sprint shares fell 17 percent in morning trading Wednesday.

The Wall Street Journal said Tuesday that Sprint decided not to pursue the merger of the No. 3 and No. 4 U.S. carriers. The paper cited unnamed people familiar with the matter. The merger would have faced tough opposition from U.S. regulators who want to preserve competition among wireless carriers.

In a statement Wednesday, the CEO of Softbank and chairman of Sprint said the company's focus had shifted away from acquisitions.

"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," Masayoshi Son said.

In his own statement, Claure suggested Sprint would be taking on Verizon and AT&T through price cuts.

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

The talk of a new boss also brought up old talk of Sprint moving its campus to Silicon Valley, an unfettered rumor that first started in December. Both Sprint spokespeople and business experts say that's not going to happen.

For Sprint customers, a new CEO means very little.

"When it gets down to our level of service, who is running the show is sort of beside the point," said customer Stephen Marian.

But for others it brings questions about the company's future, both physically and economically.

"You're talking about startups. Sprint is not a startup - it's a mature company," said Rockhurst Professor Anthony Tocco.

Tocco has tracked Sprint for three decades. He said Silicon Valley doesn't make good economic or business sense for a telecommunications company struggling in the market.

"You can't take your operations, you can't do it. It's almost impossible to take everything and move it. It would cost millions, if not billions of dollars to move your operations," he said. "Think about what it would cost to recreate a Sprint in Silicon Valley. You're talking $5 billion, $6 billion. There ain't no way they're going to spend that kind of money to recreate it. No way in hell they're going to do that."

When Sprint and Nextel merged in 2005, the company moved from its Overland Park, KS, location to Reston, VA.

Many living in the Kansas City area say their reason for leaving Sprint was coverage. Some who work near Sprint's headquarters said they acknowledge the irony that they don't get good network coverage.

Sprint's viability is crucial to the area's economy. Tocco said it's mostly responsible for the economic growth along 119th Street, keeping countless businesses alive.

Hesse joined Sprint as CEO in 2007 and the company moved back to Overland Park in 2008. It has lost money every year since then because of stiff competition and the disastrous legacy of the 2005 Nextel acquisition.

Tocco believes the failed merger with T-Mobile cost Hesse his job and the growth Sprint needed to stay competitive.

"With T-Mobile, Sprint becomes a player with Verizon and AT&T. Without them, they just become another telecom company who can't get beyond 45 to 50 million subscribers and you need to have 80 to 100 million subscribers to make it in this business," he said.

Nearly doubling its consumer base is no easy task, especially after regulators shut down the T-Mobile merger.

"Sprint's got to learn to cut cost. You can't cut fiber cost, fiber is in the ground, you can't cut that cost. The only cost they got to cut are people. Or get more subscribers," Tocco said.

But Hesse has been credited with improving the carrier's customer service and shepherding it back to the cusp of profitability. The soft-spoken Hesse was also the company's chief pitchman, appearing in its TV commercials for several years.

Sprint shares fell $1.22 to $6.06. It was the lowest level for the shares since last October.

T-Mobile US shares dropped $2.76, or 8.1 percent, to $31.15 in morning, erasing several days of gains, as the prospect of a Sprint deal faded.

Claure's tough talk on pricing and the prospect of a continued battle among four national wireless carriers brought down the shares of Verizon by 1.5 percent and AT&T by 1.3 percent.

Copyright 2014 KCTV (Meredith Corp.) and The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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