Sprint Nextel's board of directors announced today they have selected Daniel Hesse, the former CEO of Embarq, as their new CEO.
Hesse, 54, previously had served as CEO of Sprint's local telecom division before the company spun it off and formed Embarq in 2006. Before that, he spent 23 years at AT&T and was the president and CEO of AT&T Wireless Services from 1997 to 2000.
Sprint has been searching for a new CEO since October, when former CEO Gary Forsee stepped down under investor pressure. "Dan Hesse is the right person to lead our company," says Sprint board member Irvine Hockaday, who chaired the board's CEO search committee. "He is a proven leader with deep wireless experience as a chief executive and an established track record of generating strong operating performance."
Telecom analyst Jeff Kagan, who said in October that Sprint’s new CEO needed to focus the company more on marketing and messaging, gives Hesse’s appointment a big thumbs-up. "I have followed Dan Hesse over the last two decades," he says. "Dan headed AT&T’s wireless operation in the 1990s. . . . That business was a strong and innovative company."
Hesse takes over during a difficult time for Sprint, which in recent years has experienced continued difficulties in integrating former Nextel users into the Sprint network; investor nervousness over the future of its $5 billion WiMAX investment; and a shrinking subscriber base. In the quarter leading up to Forsee's resignation, for instance, Sprint announced it had lost 337,000 customers. A recent report from UBS Investment showed that Sprint's average revenue per user (ARPU) is falling at a rate of 5% per year, while AT&T and Verizon's ARPUs are growing at an annual clip of 3% to 4%.
Earlier this month, interim Sprint CEO Paul Saleh suggested that the company could spin off its WiMAX division to concentrate more fully on customer service and on improving its basic wireless offerings. Weeks earlier, Sprint announced it had terminated its letter of intent to build out a nationwide WiMAX network with Clearwire.
"We cannot afford as an organization to not focus on customer experience and on the simplification of the business," said Saleh, explaining why Sprint had terminated its plans with Clearwire. "And where things broke down was [that] we could not afford to have a potentially confusing experience from a customer perspective in markets where Clearwire was and markets where we were to service customers in a simpler way."
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