Four Things Sprint’s New Chief Needs to Fix ASAP
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Now that the distraction of a merger is over, Sprint’s new CEO Marcelo Claure will need to work fast to repair the third-largest U.S. wireless carrier, which watched 20 percent of its value disappear this morning following news of it abandoning its bid for T-Mobile.
Over the next few weeks, Claure will roll up his sleeves and start cracking on a few things to fix what his boss, Masayoshi Son, has called Sprint’s “loser” mentality.
We thought we’d give him a hand. Here are four things Claure needs to tackle immediately:
- Cut the price of service. Sprint has been losing customers — 220,000 in the June quarter alone — because the “Framily” plan it introduced in January is simply more expensive than the competition. The outgoing CEO, Dan Hesse, acknowledged the carrier was already testing pricing options, and told investors during a recent earnings call, “We may need to make some adjustment to our pricing levels based on what we learn.”
- Stop the bleeding. The company has been shedding subscribers, as other carriers make gains at its expense. Sprint had been blaming its troubles on disruptions caused by an ambitious infrastructure upgrade, in which it was ripping up and replacing older networks. But now that this work is mostly complete, it’s time to focus on attracting — and holding onto — customers.
- Convince Chairman Masayoshi Son to break out the checkbook. Sprint will need to continue to make network investments if it hopes to keep pace with larger rivals such as Verizon and AT&T. The stakes are high. Verizon Wireless CEO Daniel S. Mead estimated the industry invests something on the order of $35 billion a year on infrastructure — his own company spends around $16 billion annually. Sprint will have to fork over billions just to keep pace. Sprint said Claure’s “first priority” will be to continue the build-out of Sprint’s network.
- Get other costs under control. The company has lost money every year for the past five years, following its merger with Nextel. Sprint posted a modest one cent per share profit in its recent quarter, thanks to lower expenses. Claure pledged to keep the company moving in this direction, noting, in a statement, “We will focus on becoming extremely cost-efficient and competing aggressively in the marketplace.”