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Hesse Stumps for Merger, Comments on Price War

Wed, 05/07/2014 - 10:03am
Andrew Berg

With Sprint stock up 18 percent since posting narrowing losses in its first quarter earnings, CEO Dan Hesse says a stronger number three carrier is needed to compete in a price war with rivals like AT&T and Verizon. 

Hesse took to Bloomberg TV Tuesday with a familiar message, namely that the duopoly of AT&T and Verizon will only ever be countered by a larger carrier that has comparable scale and cash flow. 

"It really is a duopoly," Hesse said, claiming AT&T and Verizon together take home 84 percent of total EBITDA in the U.S. wireless industry. "The industry would be healthier, you'd have healthier competition with a stronger number three. The real issue for consumers, is a strong number three will get one and two to react more aggressively." 

Hesse also commented on how long a company like Sprint could sustain an aggressive price war like the one recently instigated by T-Mobile. 

"It puts stress on us and in particular our ability to invest in networks," Hesse said. 

When asked whether Sprint could make a play in the world of content, Hesse said his company was absolutely looking in that direction. But he said he couldn't comment on the specifics. 

Looking down the line, Hesse spoke hypothetically about his place in a merged Sprint and T-Mobile, saying he wouldn't be upset if he wasn't the one in charge. He said there were a number of other opportunities to participate in the wireless industry if he chose to leave. 

T-Mobile's outspoken CEO John Legere has been ribbing even Sprint recently, with Legere tweeting yesterday that Sprint was copying T-Mobile by lowering rates at its Boost prepaid brand. Hesse laughed off Legere's antics. 

When asked whether Legere was a true peer in the wireless industry, Hesse playfully praised the job Legere has done in turning around T-Mobile. 

"Yeah, he's my peer, John used to work for me," Hesse said. "He's doing quite a fine job there."

 

 

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