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Phones

Sprint CEO will cut costs to bring back customers

Marcelo Claure is focused on lowering expenses and prices as he tries to turn around the struggling wireless carrier.

marceloclaureportrait.jpg
Sprint's new CEO, Marcelo Claure, wants his company to "get back in the game." Sprint

NEW YORK -- Marcelo Claure, Sprint's new CEO, said Thursday his company has a long list of "nice to have" items -- and every one of them is getting cut during the wireless carrier's turnaround effort.

"We've got to be fast, we've got to be flexible, we've got to be nimble," he said at the Goldman Sachs Communacopia Conference here, though Claure declined to specify exactly where he plans to make cuts.

After being named CEO just over a month ago, Claure -- the former head of wireless supplier Brightstar -- said he plans on "getting [Sprint] back in the game" and regaining some of the millions of customers the carrier lost in recent years as it went through a costly network overhaul. Claure plans to do this by lowering both Sprint's expenses and the prices it charges customers. He said management is monitoring every dollar spent and is undertaking a broad review of Sprint's practices.

Claure didn't mince words on how much his company has been struggling. He said the wireless carrier's services were more expensive than some competitors even though its network was worse, its phone plans were confusing and its marketing involved a talking hamster. Also, Sprint was spread too thinly, competing -- and losing -- in far too many markets.

"As of a month ago, we stood nowhere," he said. "There was no reason customers should be buying a phone from Sprint."

Claure said he plans on rebranding the company as a value player -- which would pit it more directly against T-Mobile -- and focusing on improving its network in key markets with the company's 2.5 gigahertz LTE network band. Last month, Claure spearheaded a plan to create Sprint's first-ever family share plan, doubling the amount of data subscribers get for the same price as competitors, and it started offering to reimburse customers for early termination fees if they switch to Sprint, following a similar offer from T-Mobile.

These efforts could help reinvigorate Sprint, the third-largest wireless carrier in the US, following its months-long bid to buy T-Mobile, the fourth-largest. A formal deal never materialized after stiff disapproval from regulators. However, pushing to become a cheaper wireless player could weaken Sprint's already soft margins and incite a pricing war with T-Mobile, which has no interest in losing its position as the low-cost player in mobile, said Jan Dawson, chief analyst at Jackdaw Research.

As a small sign of improvement in recent weeks, Claure said Thursday that Sprint posted a handful of days in which it had net additions of customers, instead of net losses. Its competition, though, is signaled substantially more strength. Verizon on Thursday said its retail postpaid net adds are more than 40 percent higher so far this quarter than they were a year ago, when it reported 927,000 net adds. Meanwhile, T-Mobile on Wednesday said it had its strongest month ever in August, bringing in 2.75 million new customers.

Dawson said it's unlikely Sprint can stay a value player in the long term -- it simply can't afford it. But, it could eventually start to compete on network quality once it improves its infrastructure, he added. The carrier now has largely completed the overhaul of its 3G network but is still working on its LTE upgrades. Its Sprint Spark enhanced LTE, which combines multiple bands of spectrum for faster service, is only available in about two dozen markets.