Sprint Shuffles Senior Management; Subscribers Top Estimates
(Bloomberg) -- Sprint Corp. is shuffling its top ranks ahead of the proposed $26.5 billion merger with T-Mobile US Inc., with Chief Executive Officer Marcelo Claure becoming executive chairman and Chief Financial Officer Michel Combes taking over as CEO by the end of May.
The job changes follow a quarter when Sprint added 55,000 phone customers, its 11th-straight increase. The solid gains -- coupled with T-Mobile raising its industry-leading subscriber forecast on Tuesday -- may weaken the companies’ argument that a merger is necessary to better compete with larger rivals and invest in 5G networks.
In addition to serving as chairman, Claure will take the chief operating officer job at SoftBank Group Corp. and become CEO at SoftBank Group International. The move is expected to happen before the end of the month. The Bolivian native was originally hired by Masayoshi Son when SoftBank acquired his phone distribution company, Brightstar.
Son appointed Claure in 2014 to replace Dan Hesse as Sprint CEO, and Claure was appointed to SoftBank’s board of directors last year.
The company added 39,000 wireless subscribers in the fiscal fourth quarter, compared with a loss of 118,000 a year earlier. Analysts predicted a gain of 9,000 customers.
- The company posted net income of $69 million. Analysts predicted a net loss of $349 million.
- Sprint posted a fiscal fourth-quarter gain of 2 cents a share. Analysts predicted a 6 cent loss.
- Revenue climbed to $8.08 billion. Analysts expected $8 billion.
Sprint’s performance will likely be overshadowed by a potential showdown in Washington, where regulators will weigh whether the T-Mobile merger harms competition. Given the history of antitrust opposition, some analysts have given the transaction only 50-50 odds of passage.
Sprint shares fell 4.6 percent to $5.17 at the close in New York, the third day of decline. The stock plunged 14 percent Monday, its worse drop in a year, amid concern the takeover would be rejected.
Sprint and T-Mobile have complementary wireless spectrum that may serve as a strategic advantage as the companies build a 5G network. T-Mobile controls a large portfolio of lower-band airwaves that can travel long distances and pass through walls and windows. Sprint, meanwhile, has the largest U.S. holding of higher-band, 2.5-gigahertz spectrum, which can handle more data capacity but over limited distances.
Sprint is controlled by Tokyo-based SoftBank and T-Mobile is majority-owned by Germany’s Deutsche Telekom AG, which will have the biggest stake in the combined entity. The overseas ownership creates another hurdle: It could expose the proposed merger to scrutiny by a secretive national security panel that reviews acquisitions of U.S. businesses by foreign investors.
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