Sprint and T-Mobile Merger Dies as Bolivian Marcelo Claure Named New CEO
Sprint has a new champion leading its Kansas-based wireless service and he is 6-foot-6 from south of the border. The No. 3 wireless carrier in the United States not only dropped its bid for T-Mobile earlier this week, it replaced its CEO with a Bolivian billionaire.
Starting Aug. 11, Marcelo Claure will begin his new term as Sprint president and chief executive. The founder of Miami-based Latin American-focused wireless company Brightstar -- which Sprint's parent company Softbank is in the process of acquiring, likely making him a billionaire -- Marcelo will look to revive a choked brand.
The challenge won't be easy, but the charismatic Marcelo has been touted as a dynamic asset wherever he has been. The World Economic Forum has called him "bold, brave, action-oriented" and the relatively young Marcelo has a knack for making something out of nothing, having built Brightstar into a multi-billion dollar company with global reach from scratch. Marcelo's first job out of college? Bolivian Soccer Federation general manager -- something he landed through a conversation aboard a plane.
Ever since the end of last year's holiday season Sprint and its parent company SoftBank Corp. have been making the argument for the acquisition of T-Mobile. Only with scale and by joining forces, the carrier repeatedly said, would they be able to compete on a level playing field with Verizon and AT&T. (For comparison, Verizon sports 122 million subscribers and AT&T has 116 million. Sprint, meanwhile, has 55 million, and T-Mobile falls fourth with 50 million.)
"I brought the network war and price war [to Japan]. I'd like to bring that to the States," Sprint chairman and SoftBank chief executive Masayoshi Son said to industry officials in March. "I would like to provide an alternative to the oligopolistic situation that two-thirds of American households can only get access to one or two providers. I'd like to be a third alternative with 10 times the speed and lower price."
The bid, however, has failed to seduce lawmakers. Both the Federal Communications Commission (FCC) and the U.S. Department of Justice's antitrust division have said they are wary of market consolidation. Reducing the number of national wireless service providers from four to three, they say, will only hurt customers. The quiet, but solid rebuke, it seems, has worked.
"If you have more customers, you can afford to build a larger network," former Sprint CEO Dan Hesse told CNET in an interview. "Only then do you have the revenue to justify building in smaller suburbs and rural areas. If you live in an urban core, you will have access to AT&T and Verizon, and you'll also likely have access to T-Mobile and Sprint. But when you go to less populated areas, Sprint and T-Mobile might not be there."
Although nothing was certain, unnamed sources close to the Wall Street Journal and Bloomberg have disclosed that eccentric T-Mobile CEO John Legere was tipped to run the new Sprint-and-T-Mobile company. What Marcelo Claure will bring to Sprint remains to be seen, but he will have to deal with an infrastructure that is skewed at best. Sprint requires more low-frequency spectrum in order to adequately expand its footprint and the FCC just recently dealt another blow: no $10 billion coalition with T-Mobile for next year's spectrum auction.
Marcelo faces an uphill battle with a rather boring brand compared to the other big three, but he has the kind of attitude at his disposal that might bring Sprint out of its rut: two-thirds of the year on the road and late night marathon business calls are the norm for Marcelo. If his entrepreneurial spirit can stand the red tape of U.S. wireless policy, then Sprint may indeed have its own silver lining in the form of this beguiling Bolivian billionaire-to-be.
T-Mobile, meanwhile, has already turned on its formed suitor. But nobody expected anything less from Legere.
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