Former CEO Testifies Sprint Will Survive Without the Merger

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U.S. District Court in New York is hearing testimony concerning T-Mobile’s intent to acquire Sprint, and being presented with conflicting accounts about whether the carrier can survive without the transaction. Former Sprint CEO Marcelo Claure testified a merger with T-Mobile was not necessary for the company’s survival. This contradicts other executives who have appeared as witnesses in the New York antitrust trial that will decide if the deal goes forward, Bloomberg reported.

Attorneys general from a dozen states argue the deal should be blocked because it will harm competition by erasing one of the four big U.S. wireless companies. The carriers say the deal will save Sprint from its dire financial outlook and therefore, will benefit consumers.

Claure stepped down as Sprint’s CEO in 2018, and is now executive chairman. Monday, Judge Victor Marrero, asked Claure about a comment made by T-Mobile CEO John Legere last week that Sprint would be “sold for parts” within two years if the merger fails. “Those are possibilities,” Claure responded. “I don’t necessarily agree completely.”  

The Overland Park, Kansas-based company, despite Claure’s optimism, faces a difficult future without the deal and would likely leave a number of markets. Without the transaction, Sprint would need to borrow money and raise prices, he predicted.

Legere noted that Sprint lacks the financial backing and shareholder support he enjoyed while resurrecting T-Mobile. Sprint has posted an annual net loss in four of the past five years and carries $44 billion in debt, Bloomberg reports.

Elinor Hoffmann, a lawyer for New York state, also on Monday presented as evidence a document in which Sprint’s chief commercial officer, Dow Draper, told the California Public Utilities Commission that, “Sprint will be here to compete whether we merge with T-Mobile or not.”

Claure was replaced as Sprint CEO by Michel Combes, who also testified on Monday. Under questioning by the states’ lawyer, Combes said there was a “Plan B” for Sprint in the event the merger fails to go through. Under that plan, Sprint would focus on fewer markets, though its network would still cover about three quarters of the U.S. population.

December 18, 2019

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