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Communacopia: Sprint Nextel CEO Dan Hesse: Down Economy Could Be A Macro Benefit For Carriers

Dan Hesse’s been on the job at Sprint (NYSE: S) Nextel as CEO for nine months and made his first appearance at an investor conference in that role at Goldman Sach’s Communacopia today. Hesse: “Hopefully the events of the last few days won’t make a significant change” to customer decisions, but it very well could. But he sees the potential for “a macro benefit to the industry there”—maybe customers will stay put with their current carriers and upgrade devices less frequently in this economy. “This is not a prediction of things going forward,” he carefully added, but churn is one of the most important drivers of profit, a sort of “scoreboard for customers.” That said; there will be more pain on the business side as more people are fired and laid off around the country. Hesse: “Sprint is the largest wireless provider to businesses in America.” The dark clouds could very well find their way over Sprint again, but for entirely new reasons that have less to do with customer service, the carrier’s admittedly weakest point until recently, and more to do with other businesses’ spending power.

Credit rating: Hesse: We have a kind of split credit rating between investment grade and non-investment grade… I think we have been hit harder than some other telecom companies because our debts aren’t as strong.” Re-addressing Sprint’s quick turnaround on last month’s plan to raise $3 billion in capital, Hesse said he pulled the plug on the deal after just one day because the terms weren’t favorable. “When the terms weren’t what we wanted, we walked away. We could have done it.” The plan was to take down debt by bringing more cash into the business.

More on Clearwire (NSDQ: CLWR) and other info after the jump...

Clearwire: Hesse: “We still have every expectation that the deal will close in the fourth quarter… The confidence level that the deal will close and get approved is very, very high.” Once the deal closes, Clearwire will have $3.2 billion in investments and will need to raise an additional $2 billion before the network is completely built out. Admittedly, the economy isn’t ideal for raising capital at this time and may not be down the road, but “look at who the investors are,” Hesse said, seemingly confident that other investors will follow based on that alone.

iDEN: Hesse reiterated that “everything is on the table” and has been since he came to the company. “I’ve looked at everything including iDEN.” Regardless of potential suitors in the offing, Sprint’s focused on revamping its iDEN services. Hesse: “Whatever option you decide to pursue, the healthier the business the better… We don’t have to sell the iDEN business… it’s a valuable asset.”

Price cuts: Hesse: “Any moron can drop prices.” Sprint had the opportunity to lead the industry in price cuts because “AT&T (NYSE: T) and Verizon (NYSE: VZ), for example with their wireline businesses, are less prone” to drop prices out of a concern of more “cord-cutting” at home. “We’re focused primarily on adding value.”

NFL Mobile Live: It’s the most popular application the carrier has launched this year. It tracked hundreds of thousands of downloads within days of its release on the carrier.

iPhone: Hesse: “There’s no question, Apple’s got a strong brand. If you take an iPhone and price it at $200 it’s going to do well so I’ll give credit where it’s due.”

Sep 18, 2008 10:21 AM ET

Posted In: Entertainment, Sports, Companies, Apple, SprintNextel, communacopia, dan hesse

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