Sprint CEO Marcelo Claure promises bigger changes

After 20 tumultuous months at the helm of Sprint Corp., Marcelo Claure promises bigger changes to come at the Overland Park-based wireless carrier.

He already has overseen more than 6,200 job losses. He’s slashed budgets by billions of dollars. He’s pursued rival companies’ customers with aggressive pricing deals.

Claure’s efforts delivered a bit of a payoff Tuesday when Sprint reported adding a small number of high-value customers in the first months of this year even as Verizon and AT&T shed some of theirs. All three continue to trail T-Mobile’s large gains in high-value customers.

In its annual earnings report, Sprint also said it operated its business at a profit for a full year. The company still lost money — nearly $2 billion — after paying interest on its debt and some other charges, but operations haven’t run profitably in nine years.

“2015 was a very important year for setting the foundation for a successful transformation of the company,” Claure said in a conference call with Wall Street analysts. “Now we have to build on that momentum to take our transformation to another level in 2016.”

This second phase, as Claure called it, should be easier on employees.

“We don’t expect any massive run of layoffs this year,” he told reporters in a second conference call Tuesday.

Sprint shares rose to $3.67, a gain of 18 cents or 5.16 percent, after the company’s report and Claure’s comments.

Some analysts remain skeptical about how far Sprint has gone to remake itself into a stronger competitor.

Analyst Craig Moffett at MoffettNathanson Research said Sprint essentially has been buying customers, skimping on its network investment plans and solving its cash needs by selling assets.

“It is clearer than ever that Sprint is playing for time,” Moffett wrote in an analysis of the company’s latest quarterly update.

Moffett speculated that Sprint owner SoftBank Group Corp. in Tokyo may still want a merger with T-Mobile, perhaps in 2017 after U.S. elections have a chance to change regulatory attitudes in Washington. SoftBank, which gained control of Sprint in 2013, installed Claure as CEO in mid-2014 after deciding it would be unable to gain Washington’s approval to merge with T-Mobile.

Claure talked about T-Mobile on Tuesday but as a model for Sprint’s future rather than as a partner in it.

Sprint’s wireless network is a bit better than T-Mobile’s, Claure said. But T-Mobile has a much better network of stores and other ways to reach customers. In Chicago, for example, Claure counted 27 T-Mobile stores downtown compared with only three Sprint stores.

This coming year will see Sprint open many more stores. Sprint also will make it easier for consumers to shop, resolve customer service questions and complete other transactions online — which will reduce costs for Sprint in the process.

Claure said the company has more than 750 initiatives to change how it does business and cut costs.

“We are determined basically to continue to take costs out of the business. I think this first phase, we’ve done a good job of taking (out), I would say, the lower-hanging-fruit costs in the business. The second phase is one that is a lot more transformational.”

Analysts and other companies have been looking for evidence of Sprint’s work to add towers, small cellular sites and other upgrades to improve its network. They’ve come up wanting.

Claure said that’s because Sprint is handling the upgrades differently, bypassing big network equipment makers it has used in the past.

“They were late, the quality was bad and we caused a disaster for our customers. This ain’t going to happen again while I’m the CEO,” Claure said. “We’re a lot smarter in how we’re deploying our network.”

In Tuesday’s update report, Sprint said it added 447,000 subscribers in the first three months of this year, giving it 58.806 million connections to its network at the end of March, up from 56.137 million a year ago.

Among its gains were 22,000 high-revenue wireless phone customers who are more profitable for carriers than prepaid service customers and tablets that connect to its wireless network. Verizon and AT&T each reported a decline as T-Mobile led the industry by adding 877,000.

Financially, Sprint lost $554 million in January, February and March, compared with losing $224 million in the same months of 2015. The months made up the final quarter of Sprint’s fiscal year. For the year, the company lost nearly $2 billion, compared with losing $3.3 billion a year ago.

Revenues in the quarter were $8.1 billion, and for the year $32.2 billion. Both totals were down compared with a year ago, but Sprint said its revenues have stabilized at about $8 billion per quarter.

Looking forward, Claure said Tuesday that in a year, Sprint would be generating as much cash as it needs, though it would continue to raise money through asset sales. In two years, he said, the company would produce a net profit, counting all costs, “for sure.”

This story was originally published May 3, 2016 at 7:07 AM with the headline "Sprint CEO Marcelo Claure promises bigger changes."