Sprint shares plunge as it ends T-Mobile bid
Both T-Mobile and Sprint shares were down after their long-discussed deal was abandoned and Sprint’s owner replaced the longtime CEO.
AP Technology Writer
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 Miami-based cellphone distributor Brightstar, will replace Dan Hesse on Monday, Sprint Corp. said Wednesday.
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 more than 17 percent in morning trading Wednesday. T-Mobile shares were down 6.4 percent to $31.75.
Sprint decided not to pursue the merger of the No. 3 and No. 4 U.S. carriers after concluding 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, though he didn’t address the Sprint deal specifically.
“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.
Claure is originally from Bolivia, and built Brightstar into the world’s largest distributor of cellphones. Softbank will be acquiring his stake in the company, it said.
The chairman of the Federal Communications Commission, Tom Wheeler, welcomed news of Sprint dropping its T-Mobile bid.
“Four national wireless providers is good for American consumers. Sprint now has an opportunity to focus their efforts on robust competition,” he said in a statement.
Hesse joined Overland Park, Kansas-based Sprint as CEO in 2007. It has lost money every year since then because of stiff competition and the disastrous legacy of the 2005 Nextel acquisition, 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.
Last week, T-Mobile received an unexpected offer from Iliad SA, an upstart French telecommunications company, offered $33 per share for 57 percent of T-Mobile. However, Iliad is much smaller than T-Mobile, and analysts doubted the deal would be taken seriously by T-Mobile.
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 1.4 percent and AT&T by 1.3 percent.