Sprint ‘once and for all’ will upgrade its network, CEO says

Sprint will “once and for all do the right investment” in its network, CEO Marcelo Claure vowed Wednesday days after merger talks with rival T-Mobile US collapsed.

Claure also seemed to outbid Sprint Chairman Masayoshi Son as to what that investment will cost. Son, whose SoftBank Group Corp. owns more than 80 percent of Sprint, said earlier this week that Sprint would spend $5 billion to $6 billion in the coming year to improve its network.

“I would call that the lower end. If it’s possible, we’re actually going to spend more,” Claure said during a presentation at an industry conference in New York.

Claure said Sprint would revert to “a more traditional” network upgrade by adding cellular towers rather than limiting itself to innovations it has pursued in the last two years. These included small cellular devices on the sides of buildings and a free Magic Box customers could plug into a wall socket.

“We’ve been successful in certain areas, and to be fair we haven’t been successful in others, so we’re going to go with a more traditional build-out,” Claure said. “I think our friends at the tower companies are going to be very happy.”

Claure also said that Sprint is racing against the clock, recognizing that the company’s ability to steal customers from other carriers depends heavily on its network. He called the current network “good” and “competitive,” but added, “I would like the opportunity to have Sprint compete when we have the best network.”

More than two and a half years ago, one analyst’s report claimed Claure had sought a “major network investment program” costing $25 billion over five years. The Wall Street Journal later reported that the purported plan had been quickly dismissed, though Sprint disputed some parts of the Journal’s account.

Sprint recently has been able to attract new customers but has relied heavily on price discounts and promotions.

Walking away from T-Mobile leaves Sprint as the smallest national carrier in a highly competitive market in which growth depends heavily on stealing rivals’ customers. Sprint’s 54.03 million subscribers trail T-Mobile’s 70.73 million, AT&T’s 138 million and Verizon’s reported total of 115 million retail subscribers, which excludes some connections.

One network limitation, Claure said, is that fewer than half of Sprint’s towers can take advantage of the company’s fastest data speeds. He said extending that capability nationwide would be “phase one” of the company’s network upgrade.

If the merger with T-Mobile had gone through, both companies would have saved money by spending less on one combined network than the two they run separately. Spending heavily on the networks before merging could have been seen as a waste of money.

Wednesday’s public comments were Claure’s first since the merger talks ended.

He said the company remains interested in working with cable operators and cited this week’s agreement with the cable company Altice as testing that partnership concept. He acknowledged that Sprint approached another cable operator but said those talks failed. Charter Communications had acknowledged those talks by rebuffing Sprint’s offer publicly.

Early this year, however, Son had said that SoftBank would be willing to consider many options, including being a buyer, a seller or merger partner.

Claure said that ultimately Son and SoftBank, for which Claure serves as a director, were willing to walk away from T-Mobile because of their confidence in Sprint’s future on its own.

This story was originally published November 8, 2017 at 1:13 PM with the headline "Sprint ‘once and for all’ will upgrade its network, CEO says."