Sprint CEO talks consolidation, corporate responsibility
NEW YORK — Sprint CEO Dan Hesse won't comment on speculation his company is preparing to merge with T-Mobile, but he will say that having a third large U.S. mobile company that could rival the size of AT&T and Verizon would be a good thing.
Speculation has been swirling that Sprint, the third largest U.S. wireless carrier, would acquire T-Mobile in a blockbuster deal valued anywhere from $31 billion to $50 billion.
If Sprint were to make such a move, one of the biggest roadblocks would be the reluctance of U.S, regulators to let the U.S. mobile market shrink from four major players to three.
"I can't talk specifically about any particular potential merger, but I do think that the U.S. wireless industry would be healthier and consumers would be better off with three strong competitors vs. basically a duopoly, which is what you have today," Hesse told USA TODAY in an interview.
Hesse said a third competitor would drive prices down and might also motivate AT&T and Verizon to innovate more. He added that a third major competitor might be able to build networks in rural and suburban U.S. communities that are currently only serviced by AT&T and Verizon. "If you combined, let's say, Sprint and T-Mobile together, there would be enough customers to build a third network," he said.
The potential benefits for consumers aren't as clear to many analysts who cover the telecommunications industry and say losing one mobile carrier could drive prices up, and that size alone won't make a potential third mobile company more competitive.
"The challenge for Sprint is that despite all the rhetoric about how three strong companies would be better than the status quo, history teaches that three-player markets don't tend to have lower prices than four-player markets," says Craig Moffett of MoffettNathanson Research.
Also, he says T-Mobile is doing great right now without Sprint because it has been rapidly adding subscribers, has a strong network and has done well in the urban markets it has targeted.
Roger Entner of Recon Analytics agrees, saying T-Mobile is gaining the most customers out of all the mobile companies. "Just saying larger is better is a woefully incomplete answer," he says. "Superior management, superior product development, superior ideas are what is trumping size. T-Mobile is showing that."
And in the key area of regulatory approval, both Moffett and Entner say a merger of Sprint and T-Mobile would face fierce resistance.
A hookup with T-Mobile also could affect the strides Hesse has made instilling responsible corporate values.
Sprint's focus now is really about "simplicity, value and innovation," Hesse said, adding that he and his management team are working hard to run a more conscious and environmentally friendly company. Some of their initiatives include making applications more accessible for hearing- and visually-impaired people, reducing the company's greenhouse-gas emissions and designing programs to recycle used phones.
Natasha Scotnicki is director in the corporate program at Ceres, a non-profit that helps businesses measure and adopt sustainable business practices, and she has worked with Sprint for three years. She worries about how Sprint's corporate responsibility efforts would be maintained if it merges with T-Mobile.
"An ongoing challenge is just to think about how leadership is maintained when there are different mergers and acquisitions," Scotnicki says. "If there is another merger with T-Mobile, how does that (affect) sustainability efforts?"
And what does the mobile telephone executive do with his own device, a HTC One (M8) Harman Kardon edition? Hesse hasn't started a Twitter account because it would take too much time to keep up. He keeps his Facebook page private — accessible only to his about 100 real friends.
Hesse, 60, who is married and has two teenage sons, said his favorite applications are Spotify, Poweramp and Sprint's family locator.