Sprint plans price cuts and eventual layoffs, new CEO tells workers
- 16 August, 2014 02:23
Sprint's new CEO Marcelo Claure addressed employees for the first time Thursday and promised price reductions as soon as next week, according to a report.
Sprint didn't deny the report of Marcelo's comments. A spokesman also confirmed Friday that Sprint is "focusing on providing the best value in the market."
According to the account of Claure's comments, he told workers, "We're going to change our plans to make sure every customer in America thinks twice about signing up to a competitor." The report, which first appeared in LightReading.com, also said that "very disruptive" rate plans are coming next week.
Sprint didn't dispute Light Reading's report, but a spokesman said Sprint is not commenting on "any potential pricing plans before they are announced."
The spokesman, Doug Duvall, said Marcelo held his first all-employee town hall meeting before a standing-room-only crowd. He added: "He shared his passion for his family, work and soccer team and his commitment to leading Sprint. He discussed Sprint's challenges and pledged to get Sprint 'back in the game' by focusing on providing the best value in the market, completing our network build and optimizing Sprint's cost structure."
By confirming Sprint wants to offer the "best value in the market," it's pretty clear that Sprint, the third-largest U.S. carrier, will soon wage a price war with the T-Mobile, the fourth-largest U.S. carrier that has quickly been gaining on Sprint.
Analysts recently said Sprint's recent "Framily plan" isn't competitive in the market, which former CEO Dan Hesse acknowledged in late July before his departure on Monday.
The Sprint Framily plans costs $160 a month for 4GB of data, but comes with overage charges and won't allow tethering. Meanwhile, T-Mobile has a family plan offered through September that costs $100 a month for four lines and 10GB of data, although each line is limited to 2.5GB.
Hesse had earlier described subscriber plans Sprint was testing that have tiers of data and unlimited data.
According to Light Reading, Claure also told employees that price cuts are needed because Sprint's network isn't at the level of performance and reach that it should be. "When you have a great network, you don't have to compete on price," he reportedly said. "When your network is behind, unfortunately you have to compete on value and price."
Claure also reportedly told workers that job cuts at Sprint are inevitable, but didn't offer details on when that might occur. Once better pricing plans are in place, he said he would take advantage of Sprint's spectrum holdings to build the best network in the U.S. Analysts have estimated that Sprint's available spectrum holdings are double that of any of the other three national carriers -- T-Mobile, AT&T and Verizon Wireless.
Claure also reportedly said that he met with Apple CEO Tim Cook on his first day on the job, adding, "Apple will become a crucial part of Sprint."
Claure, born in Bolivia and part owner of Miami's major league soccer team, also reportedly told employees that he'd fly in business partner and soccer star David Beckham to meet them once they achieve a net-positive number of subscribers (adding more than they lose). Sprint lost more than 220,000 subscribers in the last quarter.
Claure joined the Sprint board in January. He founded Brightstar, the world's largest mobile device distributor, which is now owned by Sprint's Japanese parent SoftBank. SoftBank controls 80% of Sprint.
Reportedly, Claure complimented T-Mobile on aggressive pricing and other market moves, but Claure wants to focus on the big two carriers (Verizon and AT&T) instead of smaller, but growing, T-Mobile.
T-Mobile CEO John Legere, known for his aggressive style, has been taunting Sprint and Claure in a series of recent tweets. After the Thursday town meeting Claure held with employees, Legere tweeted: "If the Sprint network doesn't work, is there any price that is low enough?" Legere's tweets also come with the hashtag #sprintlikehell.
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