Bolivian Telecom Vet Marcelo Claure, Japanese Billionaire Masayoshi Son Discuss How to Save Sprint
Sprint Corp. has recently reported the company's lower operating losses as well as its increasing shares for the current quarter. While Wall Street commended its growing subscribers that boosted Sprint's stock by 20 percent, experts remained extremely worried about Sprint's financial position.
Fortunately, Sprint Chief Executive Officer Marcelo Claure and Softbank's founder/CEO Masayoshi Son are already discussing an "inside plan" to pull the company out of its death spiral. According to Bloomberg Business, the Bolivian telecom vet and the Japanese billionaire believed that they know how to save the weakening firm.
SoftBank took control of Sprint after the $21.6 billion acquisition in 2013. At the time, Sprint was already in trouble. Luckily, Son announced his intention to merge the company with T-Mobile to challenge Verizon and AT&T.
The merger plan with T-Mobile, however, ran into regulatory objections and failed. That's why, Son bought Claure's company, appointing him as Sprint's CEO.
Seventeen months later, Claure and Son have decided to cut prices by offering iPhones for $1 a month last year. They also replaced most of the old executive team.
According to analysts, however, Sprint's bonds were trading at "distressed levels" and their shares were "at a worst-case scenario basis." Thus, the company announced their plan to eliminate 2,500 jobs, on Monday, bringing total cuts under SoftBank to more than 4,000.
Sprint also added that their plan to cut about $2 billion to $2.5 billion in costs is on track, Reuters noted. But it hasn't helped much. In fact, the stocks of SoftBank and Sprint plummeted to multiyear lows in mid-January. Opportunely, both recovered some with Sprint's report of third-quarter subscriber gains and lower-than-expected losses.
SoftBank has invested more than $22 billion into Sprint, but the company's current value is only $11.8 billion, compared to its $69 billion market value 10 years ago. The company's $2.2 billion in cash is also almost the same as its debt obligations this 2016.
"There is no question that Sprint's management team is finally showing real urgency in taking necessary measures to stop the bleeding," MoffettNathanson analyst Craig Moffett said. "They still have a lot of heavy lifting to do."
Amid the current shakeup, Claure and Son insisted that they know how to fix Sprint's ailing business. As a matter of fact, they are supervising the upgrading on Sprint's U.S. wireless network.
Within two years, Claure and Son promised that Sprint's system will handle the increasing demand for data-intensive content, which include watching movies and playing video games on smartphones and tablets. Claure also added that their 2.5GHz spectrum will lure more consumers as they settle to networks with greater data capacity offering the fastest downloads.
"By the end of 2017, we will have a network with the most amount of capacity," Claure said.
Meanwhile, Sprint's competitors Verizon, AT&T and T-Mobile are also seeking ways to boost their data pipelines. But unlike Sprint, they don't have to worry about where the money's coming from.
Despite having a chance to dominate the U.S. wireless business, Sprint is now No. 4 in essentially a four-player business. And the company hasn't posted an annual profit since 2006.
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