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Report: Sprint Spent $25 Million On Advisors That Were Ignored

December 23, 2015 - Written By Kishalaya Kundu

The trials and tribulations of Sprint Corp. have been well documented in recent times. The carrier has suffered from accusations of poor network quality, and has seen its status as the third largest wireless carrier in the US usurped by an aggressive T-Mobile, led by its always belligerent and often controversial chief executive, Mr. John Legere. It is in this context that the latest report published regarding the carrier by The Wall Street Journal stands out for all the wrong reasons. According to the publication, immediately after taking over as the CEO at Sprint, Mr. Marcelo Claure undertook a strategic review of the carrier’s competitive positioning. To help him in his quest, Mr. Claure reportedly appointed a group of consultants to look into the company’s dwindling fortunes, and suggest remedial actions that would hopefully get the company’s balance sheet back in order.

The group of consultants was headed by former chief executive of Telstra and US West, Mr. Dennis “Sol” Trujillo, who also happened to have struck up a close friendship with Mr. Claure while the later was coming up through the ranks at Brightstar. While some senior Sprint executives had raised the red flag at the appointment of Mr. Trujillo citing conflict of interest, the deal eventually went through, and Sprint agreed to pay as much as $50 million to the advisory group over the next twelve months for their inputs. The contract however, had to be cancelled midway through, as the Sprint Chairman, Mr. Masayoshi Son, summarily rejected all of the proposals of the advisers, but not before $25 million was paid to the motley group as per their contract with the carrier. For a company saddled with heavy losses and struggling to cut costs, it was a severe body blow, if ever there was one. It will now be interesting to see how investors would react after this revelation by The Wall Street Journal.

As a little history on the appointment of Mr. Claure as the Chief Executive of Sprint Corporation, back in August of last year, Mr Dan Hesse, the then-CEO of the firm, was shown the door by the company’s board of directors, after his position within the company became untenable once the carrier decided to abandon its pursuit of T-Mobile. For the uninitiated, Mr. Hesse was the biggest proponent of Sprint acquiring T-Mobile – then the smallest of the four major carriers in the country – which would have given the combined entity the leverage, the network, as well as the financial clout to slug it out with the big two.