Sprint confirms new CEO amid reports of abandoning T-Mobile merger

New CEO Marcelo Claure founded Brightstar, a wireless services and equipment maker

Sprint confirmed today that CEO Dan Hesse will be replaced by board member Marcelo Claure, effective Monday.

The move comes amid reports that Sprint and its Japanese parent SoftBank have abandoned plans to acquire T-Mobile following problems gaining U.S. regulatory approval of such a merger.

Sprint's new CEO Marcelo Claure
Sprint's new CEO Marcelo Claure founded Brightstar, a wireless services and equipment maker. (Photo: Sprint)

Sprint wouldn't comment on any plans to back off on a merger with T-Mobile, and analysts said such a deal isn't permanently dead.

Claure, 43, joined the Sprint board in January. He founded Brightstar Corp., now a subsidiary of SoftBank. In a statement, Sprint said that Claure will make the ongoing Sprint network buildout his first priority, "ensuring that Sprint always maintains truly competitive offers in the marketplace."

T-Mobile, the nation's fourth-largest wireless carrier behind third-place Sprint, has been attracting the most attention of the nation's carriers for aggressive pricing and no-contract deals.

Sprint Chairman Masayoshi Son cited Claure's ability to transform Brightstar from a startup to a $10 billion business at the end of 2013. Apparently referring to plans to back off a merger, Son also said, "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."

SoftBank will acquire Claure's remaining interests in Brighstar.

Hesse leaves Sprint after serving as CEO since 2007. In a statement, he referred to the "resilience" of Sprint workers during years of transitions, which included the merger with SoftBank, moving to LTE after a long period of promoting WiMax and shutting down the Nextel network.

Independent analyst Jeff Kagan said that Claure and Son are likely to foster new growth strategies for Sprint. Sprint's decision to abandon a T-Mobile merger is "what regulators wanted," he added. "Regulators want four wireless [national] carriers."

Kagan said that when Hesse arrived, the executive found a company that was "crashing and burning." Kagan said Hesse can be "credited with a heroic rebuild. He gave Sprint the strength to move ahead and prepare for the next chapter."

Jack Gold, an analyst at J. Gold Associates, said the Federal Communications Commission made the wrong decision by basically forcing Sprint to back off from a merger with T-Mobile. Combining the two companies would have provided a viable third competitor to AT&T and Verizon Wireless, Gold said.

"By themselves, it is unlikely Sprint and T-Mobile can reach the needed scale to compete effectively," Gold said. "It would take a massive investment for them to catch up to the big number two. We will continue to see them struggle, especially Sprint, which is shrinking. That's why Hesse is being shown the door."

As for T-Mobile, Gold said the company is absorbing the costs of attracting new customers with various low-price subscriber plans. "T-Mobile can't continue to buy customers, which is dragging down its finances," he said.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

It’s time to break the ChatGPT habit
Shop Tech Products at Amazon