Sprint CEO steps aside to keep Legere away from the grown-ups

Sprint CEO Marcelo Claure has undertaken a new role at Softbank, heading up the acquisition team, in what we can only imagine was a calculated more to keep the eccentric T-Mobile boss John Legere away from the suits.

Taking on the role of Executive Chairman at of SoftBank Group International and COO of SoftBank, Claure will head up the team designed to woo regulators and agonise through the cumbersome process of navigating the red-tape maze. Claure has taken a bullet for Legere here.

Legere does not seem to be a man who suffers fools gladly (putting it lightly), therefore asking the wild-eyed, at times almost rabid CEO to be calm and considerate when dealing with bureaucratic busybodies might not have been the best strategy. John Legere is not necessarily offensive, but some might be offended. Referring to AT&T and Verizon as ‘Dumb and Dumber’ might not get the same giggles in the offices of the FCC, and we doubt the FTC suits in Washington will be entertained by the magenta t-shirt or jokes about offering ‘doobies’ in goodie bags at events.

“Let me be clear that while I’m shifting my focus, I’m not leaving,” said Claure, as he confirmed Michel Combes would be moving from the CFO office to take on the CEO role.

“The main reason for effect in this change now is to collaborate with John Legere on securing regulatory approval over the next nine to 18 months. That is the most important goal to optimize in shareholder value. This is going to give me the capacity to focus on securing regulatory approval without compromising the day-to-day operations.”

Combes will now be responsible for the day-to-day operations of the Sprint business, having done such a great job at Altice, however Claure remain responsible for liaising with Softbank, as well as delivering performance and financial results to the parent company. Aside from managing the merger, Claure will also aim to ‘optimize synergies’ across the Softbank portfolio, as well as identifying how the wider group can work with the new, combined entity in the future.

Claure might not have the same flair as his counterpart at T-Mobile, but you have to give the man a bit of credit. Quietly and quite humbly, he spearheaded somewhat of a turnaround at the Sprint business since his appointment in 2014. Sprint is still at the bottom of the rankings when you look at the four major telcos across the US, though the gap is no-where near as monumental. Recent reports have suggested Sprint is quickly improving network performance, while the last few quarters have seen an improvement in the steady flow of customers flocking to the emergency exit. It hasn’t all been glamourous while Claure has been in-charge, but perhaps this is the reason he is the perfect person to liaise with the starch-heavy collars of government.

When announcing the deal, both Claure and Legere seemed to realise the government is going to be a major pothole to negotiate. The announcement, which you can see below, made several references to how it would aid President Trump’s political objectives including job creation, investment and the battle against China. Buttering up the White House from the outset is a tactic here, and quite rightly so; this deal will need all the favour and luck available if it is to have any chance of success.

While this is a merger the telco industry has been eagerly awaiting for some time, Claure will have to muster all his Latin charm to win over regulators who have not been gazing favourably on acquisitions in recent months. The team is confident this deal will improve the lives of consumers, either through an accelerating role out of 5G or a more comprehensive challenge to the AT&T and Verizon duopoly, but there will certainly be resistance.

“Sprint and T-Mobile will be hard pressed to demonstrate how their combination would benefit the public interest,” said Phillip Berenbroick, Senior Policy Counsel at Public Knowledge. “This task proves increasingly difficult when a merger drastically reduces competition in the wireless marketplace, as this combination certainly will.

“If approved, this deal would especially hurt consumers seeking lower-cost wireless plans, as the combined company’s plans would likely increase while competitors AT&T and Verizon would have even less incentive to lower prices. Unless the merging parties can demonstrate clear competitive benefits we have yet to see, we will urge the Department of Justice and the FCC to reject this deal.”

There are arguments for both sides of the case, but one argument which will have to be addressed before too long is Canada. The friendly neighbours to the north of the US have three major carriers, Bell, Rogers and Telus, with tariffs priced almost identically. Some will argue this is primarily due to the reduced levels of competition. Claure will have to make some pretty bold promises to make sure this does not happen in the US, as should this deal go through, it is highly unlikely a fourth player would rise up to take Sprint’s vacant spot; the table stakes are simply too high. Competition is paramount in the eyes of regulators.

This is a deal which will face a very-high level of scrutiny, especially considering previous T-Mobile merger attempts have been quashed by regulators on the grounds of competition, so perhaps the calm, collected and charming Claure is the best man to be sent to Washington.

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