Charlie Rose Talks to Sprint Nextel's Dan Hesse
Let me start with this: Why this deal? And why now?
Well, No. 1, the Sprint board felt this was the best path to maximize shareholder value. No. 2, it creates a much stronger Sprint, with a much stronger balance sheet, better capitalized. Three, we think it’s procompetitive; it’s good for the U.S. economy and the U.S. wireless industry. Four, SoftBank brings much more than money; they have a proven track record in improving the performance of companies that they get involved with. For example, their acquisition of Vodafone Japan in 2006 … they’ve done just a phenomenal job there. So, I’ll leave it at that, those are four good reasons.
Are there any hurdles in the way of finalizing the transaction?
We’ll go through the full regulatory process, so it will be reviewed by the SEC, the DOJ, the state regulatory organizations … which it is when you have foreign ownership of a telecommunications company, although it’s fairly common. But we’re not expecting there to be any regulatory hurdles. The regulatory process will probably take six to eight months.
And once that’s completed should AT&T and Verizon be saying, “Oh my God, what kind of competitive race are we in now?”
Well, in my view it will clearly create a much stronger No. 3. There are so many opportunities that Sprint could have pursued during my almost five-year tenure that we couldn’t pursue or consider because of our strained balance sheet. So it will make us a stronger competitor.
And will that change your priorities?
No, our priorities will stay the same. And, actually, they’ve stayed the same for five years: to improve the customer experience, to build a great brand, and to generate cash. But we’ll just have more options, more flexibility.
SoftBank Mobile was first in Japan to offer the iPhone. Sprint Nextel has had it since last year. Does this give you more leverage with Apple?
Does anybody have leverage with Apple?
If you can suddenly place a bigger order you certainly will.
That’s actually one of the advantages of this combination with SoftBank, in that not only can we tap into their technical expertise, but in terms of scale, whether it’s network equipment or chips or devices like phones, collectively we’ll get a better deal, yes.
Are there other acquisitions coming in this market?
I believe over the long term you’ll see significant consolidation in our industry. Because of the scale required to compete, the size of the investments that are required … so talk about a network upgrade—that’s $10 billion. A national wireless spectrum auction could run $4 billion or $5 billion just for the air, just to give you the right to go spend another $10 billion to build on it. So it’s a scale game, and I think as a result we’ll see more consolidation, particularly among the smaller players. I believe in the U.S. it’ll be very difficult for the big two, AT&T and Verizon, to make additional acquisitions of other carriers because they’re already so large. But if you include everybody else in the industry over time, I think we’ll see significant consolidation.
Does this move indicate that Sprint Nextel has ambitions in Asia?
No, we don’t. We look at ourselves as a U.S. wireless carrier with international capability and connectivity through partners. So we partner with a lot of wireless carriers around the world to provide seamless coverage and mobility to our customers as they travel around the world—or to other international carriers’ customers as they travel to the U.S. We do not have international ambitions at this time.
Will SoftBank bring you technology that you wouldn’t have had?
What they’ll provide us is experience utilizing technology. They’ve implemented, for example, mobile payment technology in Japan that we haven’t yet, so we can learn from their expertise.
Once this deal wends its way through the approval process, how will it benefit me, the consumer? What’s Sprint’s competitive advantage?
Our differentiating advantage today is that we offer truly unlimited data—data being pretty much everything except for voice and text. Everybody offers unlimited voice and text. With this transaction you’ll see more innovation, more technological leadership from Sprint. I won’t show our cards any more than that.