Sprint (US)

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Sprint is now the #4 national wireless service in the US behind Verizon, AT&T and T-Mobile and a leading provider of long-distance fixed line services. It was formed in 2005 from the merger of what were previously two separate but competing companies, Sprint and Nextel. The group also operates prepaid services Boost and Virgin Mobile. Sprint's local fixed line services in selected states were spun off to shareholders in 2006 as Embarq (now CenturyLink), but it still has a long distance wireline division. Despite initial hopes that the 2005 merger would allow the enlarged business to compete more effectively with its main competitors, Sprint Nextel's performance steadily declined over the next couple of years as customers jumped ship to other suppliers. There was finally a glimmer of light at the end of the tunnel in 2011 as the rate of loss, especially among valuable contract customers, slowed, allowing the group to report its first operating profits after years of deficit. The following year, Japanese mobile company Softbank made a surprise bid to acquire control of the business for $22bn. Additional potential mergers have been discussed since then, including one with T-Mobile USA, but none has materialised.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 21st Jul 2016: Japanese technology giant SoftBank, owner of US mobile company Sprint as well Japan's own SoftBank mobile and the Yahoo Japan search engine, agreed to acquire UK chip designer ARM Holdings for a whopping £24.3bn. That's more than 24 times ARM's revenues last year of £968m, and a 42% premium over its undisturbed share price. If completed, it will be the largest ever acquisition of a European technology firm. ARM doesn't actually manufacture processors, but its low-voltage designs are used in almost all smartphones, as well as in emerging "Internet of Things" devices. SoftBank's CEO Mayasoshi Son has vowed to maintain ARM's UK base, and will double the company's employees. He said that all negotiations and due diligence for the deal were completed in the space of just two weeks, though Brexit had no direct influence on the decision to acquire. However the sale is considered politically sensitive - ARM is the UK's most valuable technology company by far - and some voices have been pressing new Prime Minister Theresa May to intervene. That looks unlikely, but another offer may emerge from one or other of the two companies with the most to gain from owning ARM, chipmakers Samsung or Intel.

Adbrands Weekly Update 23rd Jun 2016: Former Google executive Nikesh Arora resigned abruptly as president of SoftBank and heir apparent to founder and controlling shareholder Masayoshi Son. The latter said Arora's resignation was the result of his own decision to remain CEO for "at least another five to 10 years" rather than retire in two years at 60. However, analysts believe Arora's departure may also have been prompted by growing investor unrest over SoftBank's development, and especially its apparent inability to turn around performance at key US business Sprint.

Adbrands Weekly Update 19th May 2016: Telecoms group Sprint confirmed the launch of its own inhouse unit, Yellow Fan, to take over a leading role on its marketing, alongside incumbent Deutsch. The move is designed to reduce third-party costs for the troubled group, which is struggling to retain the #3 spot against rival T-Mobile.

Adbrands Weekly Update 17th Dec 2015: US telecoms group Sprint announced another change of chief marketing officer. Roger Solé, previously SVP, Hispanic advertising & innovation, becomes the 4th executive to hold that role in less than two years. His predecessor Kevin Crull lasted under seven months in the role, but has been promoted to president, Sprint central US region.

Adbrands Weekly Update 19th Nov 2015: Forbes published its 4th annual survey of the world's most influential chief marketing officers, in partnership with researcher ScribbleLive and LinkedIn. No big surprise about the #1 spot: Apple's Phil Schiller topped the list for the 4th consecutive year. However the next two places went to new entrants, KFC's Kevin Hochman and Kevin Crull of Sprint, while Fiat Chrysler's Oliver Francois jumped more than ten places to take the #4 spot. Beth Comstock, now vice chairman of General Electric, moved up to 5th. Two other new entrants were at #6 and #7, Nintendo's Scott Moffitt and BP's Geoff Morrell. Rounding out the top ten were Martine Reardon of Macy's, Unilever's Keith Weed and Volvo CMO Alain Visser.


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Background

Free for all users | see full profile for current activities: Although the Sprint brand did not come to prominence until the 1970s, the company is actually one of the oldest of America's non-Bell telephone companies. It was founded in Kansas in 1899 by Cleyson Brown as The Brown Telephone Company. In the early years of the 20th century it became known first as United Telephone & Electric, then United Utilities after diversifying into nuclear power and cable TV, and finally United Telecommunications. Meanwhile, during the 1960s, railroad company Southern Pacific began turning its railway telegraph system into a long-distance telecoms service. This was spun off in 1970 as Southern Pacific Railroad Internal Telecommunications, or SPRInT for short. 

The long-distance market opened up significantly following the break-up of Bell (see AT&T), and Sprint was acquired in 1983 by GTE, which then sold it on in several instalments during the 1980s to United. The group also began building the country's first wholly digital, national fibre-optic network which delivered significantly superior line quality, completed in 1987. United changed its name to Sprint Corporation in 1992. The following year, the company joined forces with Deutsche Telekom and France Telecom to create international telecoms provider Global One. The Europeans each acquired a 10% stake in Sprint in 1996, before falling out with each other over DT's attempted takeover of Telecom Italia. In 1993, Sprint merged with local rural provider Centel to establish a presence all three sectors of long-distance, local and wireless telecoms. The creation of a joint venture three years later with cable companies TCI, Comcast and Cox Communications gave the Sprint PCS wireless service a near-national footprint for the first time. 

In the mean time, the relationship between the three partners in Global One had continued to deteriorate and in 2000, France Telecom took full control of that business. The same year, Sprint was targeted by rapacious dealmaker MCI Worldcom. Fending off rival bidder BellSouth, the partners agreed a massive $130bn merger, but it was blocked by regulators (in what was later to prove a lucky break for Sprint's shareholders). Despite its size, Sprint PCS was still regarded as one the country's weakest mobile operators, with a reputation for poor service. However newly appointed CEO Gary Forsee began turning performance around in 2003, with a series of initiatives, not least the partnership with Virgin. Rapid consolidation within the industry encouraged Sprint to enlarge its own presence, and the merger with Nextel was agreed at the end of 2004.

A much younger corporation, Nextel was founded in the late 1980s as Fleet Call by entrepreneur Morgan O'Brien. It rebranded as Nextel in 1993 and quickly established its own national cellular service by acquiring several smaller operators, as well as Motorola's wireless network in the US. This provided a sound platform for the launch in 1996 of a high quality digital network based on Motorola's iDEN technology. As well as cellular communication this gave users text and numeric paging as well as a walkie-talkie "push to talk" service, Nextel Direct Connect, which proved extremely popular with American users.

The merger of Sprint and Nextel appeared to offer significant benefits to both companies, but came with several problems as well. Not least of these was the technological challenges inherent in merging two wholly incompatible networks without alienating existing customers, especially of Nextel's popular push-to-talk service. The group was also forced to spend considerable amounts of cash to buy out various affiliate resellers around the US. It seemed at first that the advantages probably outweighed the disadvantages, provided the enlarged company could maintain Nextel's reputation for entrepreneurial and innovative services, as well as its high profit margins. That promise began to dissipate during 2006 after a sharp slowdown in subscriber growth. The merged company reported a loss of subscribers in four out of five quarters between mid 2006 and 2007. There were also reports of continuing friction within the company between rival factions from the two still separate Sprint and Nextel divisions, as well as between group directors drawn from each camp.

Chairman & CEO Gary Forsee resigned in October 2007 as a result of pressure from shareholders over the company's declining market share. Dan Hesse was eventually named as his replacement in December. Three other senior officers left the company in early 2008, including CFO Paul Saleh - who had been interim CEO until Hesse's appointment - and the chief marketing officer. See full profile for current activities


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