Sprint

Back in the 2000s, three companies dominated American Telecom. AT&T, Verizon, and Sprint. Sprint was a legacy giant and one of the biggest in the world, with as many as 55 million customers. But despite their size, Sprint would lose billions and be driven to the edge of bankruptcy. Sprint would end up being bailed out by T-Mobile, who themselves were fighting against bankruptcy in the early 2010s. But w How did t Sprint had a bigger brand, more customers, and way more money. How did Sprint die? Sprint made many, many big bets in the wrong places. But there was one that set off a long chain of dominoes, and it was championed by their CEO, Gary Forsey. He was trying to solve a problem, the mass exodus of customers. No one was happy with the telecom industry, but Sprint was particularly bad. Forsey had a solution, or at least what he thought was a solution. Sprint was going to merge with Nexthel, a gigantic wireless provider. They could add new options for customers, absorb the revenue from the millions of wireless customers, and the many government contracts. Telecom and wireless seemed Merging two gigantic companies is always tough. Often one is absorbed into another, with one being the more dominant brand. T But Sprint was a bit different. They were going to merge equally. Both companies were valued equally, and their shareholders each hold approximately 50% of the new company. So what went wrong? The two companies did a 50-50 split in everyt Management teams, executives, two headquarters, they even tried to merge the two brands together with the Sprint logo and the Nexthel colors. It was an identity crisis and an internal crisis. The two company cultures didn't fit at all, and the merging process was long and painful. Thousands of jobs were cut, and underperforming stores were shut down. Dan Hess, the Sprint CEO after-force, he reflected that, in 2020 T A merger of equals isn't a good t Bloomberg ranked the deal as one of the worst mergers of the past five years. W Yet even putting the merger problems aside, it had distracted Sprint from a bigger issue. Customers were still leaving. The experience at Sprint was still terrible. In fact, it had gotten worse. After the merger, Sprint's customer satisfaction rating had dropped to 61, the worst in the industry. The service was unreliable with dropped calls, incorrect billing, and terrible customer support. T So, what did Sprint do? Well, they fired them. That's right, fired their customers. They fired 1,000 customers. They told them, the n Generously, Sprint said it wouldn't charge them the early termination fee, w How generous? Naturally, t Keep in mind, t Were last in customer satisfaction. Last in 2007, 2008, and 2009, said Hess. People absolutely hated Sprint, but t Amidst all of t Somet Today, Apple is going to reinvent the phone. But what we're going to do is get rid of all these buttons and just make a giant screen. A giant screen. We all know how the iPhone changed the world. But what many don't know is Apple made a major deal in the background. And so went back and forth for a few months, and we finally settled for a five-year exclusive deal at&T. AT&T bet big on the iPhone. In my opinion, they secured an exclusive five-year deal with Apple. If you wanted an iPhone, you had to get it through AT&T. T It was a huge gamble that paid off big time. Customers began leaving in droves for the iPhone, and they had to react, and they weren'the only ones. Verizon in response went all in on Android with Motorola and their own Droid brand. Not as popular as the iPhone, but it was a competitor for sure. You've got to almost put the iPhone to be fair in a separate category, Sprint CEO Hess said. The Apple brand and that device has done so well, it's Hess Newsprint had to respond, but maybe they should have thought about it a bit more. AT&T offered the iPhone, Verizon offered the Droid, Sprint offered the Palm Pre. If you don't know anyt It was a webOS phone, aka a Linux based phone, and to be honest, it was way ahead of its time. It allowed for amazing multitasking and felt very intuitive. But unfortunately, being ahead of your time usually means having the restraints of your time. It was quite fragile with the sliding screen tending to come loose. Not to mention, it had a very small naturally, the Palm Pre didn'take off They had also bet on the wrong infrastructure. As a first mover in 4G, they invested in Y-Max, but over time, the industry moved towards another technology, LTE. It had better device compatibility, better coverage, and faster speeds, and soon became the universal standard. Sprint rus Much time wasted, and soon, their competitors caught up and chose the right network, LTE. Sometimes being a first mover is crucial, Other times, it just means you're the first loser, But there was, however, one silver lining in all of t HES had been working tirelessly to improve their customer support and service. I took those n To In 2007, they were the worst in the industry, but by 2011, they had gradually risen to the top. They were even awarded the most improved U. S. company in overall customer satisfaction across 43 industries. But there'still somet Most improved doesn't always mean great. The telecom industry as a whole was hated for their terrible service. Confusing plans, long contracts, terrible cancellation fees. If you compare anything to a d Sprint's customer service wasn't a strength, it was just less of a disaster. Sprint was still losing the war, so they had to make some big plays. After the failure of the Palm Pre, let's just say Sprint was eager to get in on Apple's Golden Goose. Den Hess reportedly said that the biggest reason people leave Sprint is because it doesn't sell the iPhone. So finally being able to support the iPhone after five years was a major win for Sprint, but it came with a huge cost. In 2011, the two companies made a deal. We don't know exactly what went down, but Sprint agreed to spend $20 billion on iPhones over four years. 20 billion. When shareholders heard about the company's already tightening profit margins had suddenly fell off a cliff thanks to t So Den Hess took a pay cut and gave back performance payments he received earlier, w They now had the iPhone, but there was still the issue of 4G. Sprint had to catch up, and unfortunately, that didn't mean Y-Max. But if they weren't bad enough already, the industry was about to see what real customer service was, but it wasn't from Sprint. The industry wants you to be confused. They want the way you purchase to be tough. How about t 46% of Americans say they have gone in and made a wireless decision, and gone home and regretted it. T-Mobile's new CEO, Don Ledger, had come out swinging with their new un-carrier strategy. No long-term contracts, no cancellation fees, cheap plans, good customer service. T-Mobile was in last place of the four, and most ass But un Sprint needed to act fast. They began a massive operation to overhaul their infrastructure to catch up an LTE 4G. They aimed to cover 250 million points of presence with their new network by the end of 2013. To help, Sprint also shut down the next tel-IDEN network. Despite spending billions on the merger, the technology was now old and losing customers. But it was still a vial network for businesses and first responders, so t Nextel went dark overnight, but from Sprint's point of view, it was a necessary evil. They needed the company to boost its new 4G LTE network, w But the replacement and rollout was going much slower than expected. But why? A 4G LTE network uses fiber optic cables to create a backhaul infrastructure. But Sprint didn't have enough fiber cables to build such a massive network across the US. Their competitors had invested in fiber over the past few years, but Sprint had it. T-Mobile had actually laid t We knew it would be difficult, but it was even more difficult than any of us had anticipated. Unfortunately, there was no playbook. No wireless company in the world had done somet Sprint's head of network development said, if there was a silver bullet, we would have found one. We all would Soon, Sprint scaled their goal down to 200 million points of presence. LTE soon began rolling out, but it was riddled with issues for customers. Some on the network just had no data available, or bad coverage due to their lackluster backhaul. During their profits were falling, their customers were leaving, the Sprint s In 2013, the Japanese giant SoftBank acquired Sprint for 21. 6 billion dollars. They now had a cash injection and deeper pockets to catch up to their rivals, but they were now also under the leaders He had big plans for Sprint, but in retrospect, they might not have been the best for the company. Masayos He saw one way to overcome Sprint's recent failures and weaknesses, merge with T-Mobile. In some ways, it did make sense. The the US government had kept a close eye on the telecom industry. With only four real players, fears of poor competition were In fact, they had just blocked AT&T from acquiring T-Mobile. Sprint's leaders And it wasn't just Sprint's leaders As Masayos Now wasn'the right time. A former It never occurred to us that he would not listen. Masayos Sprint executives with no alternative reluctantly followed. They suggested he attend a meeting with Wheeler later in the year, and slowly warm But Masayos Instead, he scheduled a meeting right away with the FCC chairman in DC. Insiders say that during the meeting, Wheeler was understandably hesitant. He was telling Masa that they just did all t Wheeler was just trying to be helpful. Then Masayos He began to argue in a way that wasn't helpful. You could see Masa digging It was not well played. Wheeler, however, didn't relent. Then Sun pushed the case to US senators for months, but none of them would budge. So in August of 2014, he gave up on T Sprint had spent valuable executive time that they didn't have. Sprint was continuing to lose customers and still hadn't solved the problem. Their stock had also pl They were losing $3. 3 billion every year. After the merger failure, Sun admitted, I was t We still have the customers. We still have employees. So I have to take care. He had tried to acquire Now he had to face them. To ease concerns, Masayos He told investors he remains committed to the In August 2014, Dan Hess was replaced as CEO by Marcelo Clore, an entrepreneur but with no carrier experience. Regardless, he was about to take some bold steps. So what was Sprint's new campaign essentially boiled down to almost as good, wit Half as much as competitors, in fact. They had a spectr You have to play your assets to your advantage, Clore said. Our n And in the short term, it worked. Sprint saw the biggest leap in new monthly customers in nine years. Their stock price j The message is simple. We are back in the game. We are going to offer the most competitive value for American cons But t Price cutting is good, but it usually means somet Cost cutting. Be They began relocating radio towers from private property to government locations, w In truth, despite more customers, they were still losing money. They planned to cut expenses by as much as $2. 5 billion in fiscal 2016 to end six straight years of losses. Not Network expenses, labor costs, admin expenses, anyt We'll go after everyt Instead of investing in better towers, they began rolling out magic boxes to improve 4G in customers' homes. But it wasn't enough. In 2015, they dropped to fourth place as T-Mobile surpassed them. They also needed to cut costs elsewhere to invest in their network, but they still didn't have enough cash. In 2017, I believe we invested $1. 3 billion on our network, w The quality of our network was four times worse than Verizon's, half of T-Mobile's, and even below AT&T. Then, once again, it came Masayos He soon turned back to T-Mobile for a merger. Can'teach an old dog new tricks, I guess, but t Beforehand, Sprint was the bigger player, but now T-Mobile was in the position of power. When they began talks in 2017, T-Mobile made one their parent company, Deutsche Telecom, would hold the power. T Initially, the merger went ahead, and despite several states filing to block it, the merger was approved, primarily because t District Judge Victor Marrero, who allowed the merger, stated, it is not Sprint merged with T-Mobile for $26 billion in 2020, and the Sprint name was retired for good. Sprint had a bad network and missed out big with the iPhone, but that's not why they died. T-Mobile was in the same boat, arguably in a much worse boat than Sprint. It was the decisions and leaders Sprint kept looking for quick short-term solutions, w SoftBank might have briefly saved Sprint, but in reality, they only prolonged the inevitable. If you'd But until then, I'm Hari, and I'll see