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Analysts: Sprint, Claure Need to Move Now to Reaffirm Value Leadership

Wed, 08/06/2014 - 11:00am
Andrew Berg

Dan Hesse has been the face of Sprint for nearly seven years. He's been the carrier's chief executive as well as its spokesman. His departure, which was announced today, is perhaps the surest sign that Sprint is ready to chart a new course.

Roger Entner, president and founder of Recon Analytics, said Hesse's departure didn't come as a surprise. In various interviews, Hesse had remarked that he and SoftBank head Masayoshi Son had disagreements. Hesse had also admitted in an interview with Bloomberg TV that he might like to pursue projects outside of wireless.

Entner said Hesse is leaving behind a company that is in considerably better shape than when he found it.

"Dan rescued the company from near bankruptcy," Enter said. "Then he stabilized it...and then he realized we need more spectrum and we need more money."

Hesse went on to engineer the deal to buy Clearwire, as well as SoftBank's purchase of a controlling share of the company.

"Things went off the rails with Network Vision simply because they couldn't get permits for the sites fast enough," Entner said. "Network coverage actually went down."

That said, Sprint looks on track to have most of the rip-and-replace network overhaul completed by the end of 2014 to early 2015. Sprint opened its new fiscal year with a rare quarterly profit, and Sprint customer losses slowed, a trend the carrier said it expects to continue into the next quarter.

Nevertheless, incoming CEO Marcelo Claure will still have his hands full as he looks to reassure investors that Sprint has a plan beyond buying T-Mobile. Already shares of Sprint were down 15 percent Wednesday morning on reports that SoftBank was killing the deal for T-Mobile.

Entner said that for now, Sprint will have to reassert itself as the value leader and down the line consider messaging that includes the quality of its network.

"Sprint at least initially has to recapture the value leader position," Entner said. "It is a lot easier to capture value leadership than to capture quality leadership."

Perhaps the problem with developing that position now is that T-Mobile has done such a good job with its Uncarrier initiatives.

Susan Welsh de Grimaldo, director of Wireless Operator Strategies at Strategy Analytics, said in emailed comments that Sprint may have to get its hands dirty now and fight T-Mobile US for the spot as value leader, and T-Mobile may get new ownership that is not afraid to fight a real price war.

"Sprint and SoftBank are wise not to lose time and focus with what looked like a fairly impossible acquisition due to regulatory sentiment," Welsh de Grimaldo said, referring to as yet unconfirmed reports that Sprint along today's news it is also tabling its bid for T-Mobile. 

"The company and its new CEO need to quickly move from their baby steps on new pricing propositions and their reinvigorated focus on Small and Medium Enterprise (SME) to differentiate and prove the value and quality of their revamped network," Welsh de Grimaldo said. "For example they could  take the model of customizable Virgin Mobile Custom plans with powerful parental control options to the Framily plan, or create a targeted home-zone video and music package building on their capacity as it is built out."

 

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