Shares of T-Mobile (TMUS) are in focus after the company said Chief Executive Officer John Legere will be stepping down from that post in May 2020. He will be succeeded by current President, Chief Operating Officer and Director Mike Sievert. In a conference call discussing the succession plans, Legere said he has not been in talks to join WeWork (WE), contrary to a recent report, and that he will not join companies he "hates," such as rivals Verizon (VZ) and AT&T (T).
LEGERE STEPPING DOWN IN 2020: T-Mobile President and COO Mike Sievert will succeed John Legere as CEO on May 1, 2020, the company announced Monday. Legere’s contract ends on April 30, 2020, according to the announcement. Leger tweeted Monday that the decision “has been under development for a long time."
When Legere steps down, Sievert's new title will be president and CEO, while Legere will remain a member of the board, the company said. T-Mobile added that the CEO transition is "part of the board's well-established succession planning process to position the next generation of leadership at T-Mobile to take the company forward." Sievert said in a statement, "The Un-carrier culture, which all our employees live every day, will not change. T-Mobile is not just about one individual. Our company is built around an extraordinarily capable management team and thousands of talented, committed, and customer-obsessed employees. Going forward, my mission is to build on T-Mobile's industry-leading reputation for empowering employees to deliver an outstanding customer experience and to position T-Mobile not only as the leading mobile carrier, but as one of the most admired companies in America."
Legere was named T-Mobile's CEO in 2012 and was responsible for bringing the iPhone to the Un-carrier for the first time.
LEGERE NOT IN TALKS TO JOIN WEWORK: Last week, The Wall Street Journal reported that Legere was in talks to become WeWork's next CEO. CNBC later said Legere won't take the top job at WeWork, saying that by taking himself out of the running, Legere is avoiding a potential conflict of interest, as SoftBank (SFTBY), the controlling shareholder of Sprint (S), which is the process of merging with T-Mobile, is the majority owner of WeWork.
On the company's conference call discussing the succession plans, Legere confirmed that he was never in any discussions with WeWork, but couldn't say anything because "this announcement was already scheduled" and he didn't want to jump ahead. "It made things a little awkward," Legere added. "I'm not retiring," Legere noted and reiterated he is remaining on the board of T-Mobile.
Regarding the company's outgoing CFO, Braxton Carter, Legere said Carter has continued to extend his contract multiple times through Legere's tenure and has extended through the CEO transition. Legere added that the company has plenty of qualified internal candidates and a few external ones that are being considered to "fill the rather large, pink cowboy hat."
LEGERE TAKES A SWING AT VERIZON, AT&T: Legere, who has never backed down from calling out his rivals, also said on the conference call that looking ahead, the only restrictions on him are not working for "companies I hate," including AT&T and Verizon.
WHAT'S NOTABLE: When T-Mobile and Sprint first announced plans to merge in April 2018, the companies said Legere would lead the combined business as CEO, with Sievert continuing to serve as president and COO. On Monday's conference call, Legere said Sievert is "absolutely best choice to succeed me as CEO and that the succession news "changes nothing" about the merger with Sprint.
The $26B deal between T-Mobile and Sprint has cleared several federal hurdles, but still faces a legal challenge from a team of state attorneys general seeking to block the deal. The case is set to go to trial in December.
ANALYST COMMENTARY: William Blair analyst Jim Breen told investors in a research note that while he believes that Legere's departure is a "loss" to T-Mobile, it will not impact the company's ability to close and integrate the merger with Sprint. Breen also said he does not think the departure will impact the company's ability to continue to disrupt the wireless industry.
Meanwhile, Wells Fargo analyst Jennifer Fritzsche said the news was "not as big as we thought," noting that the company was very clear that the announcement "in no way changes its view on getting the Sprint deal done." Fritzsche told investors in a research note of her own that she believes such a transition removes uncertainty, and that as president of T-Mobile, Mike Sievert has taken a very public role with the Street with an extremely strong track record in the wireless space.
PRICE ACTION: In late morning trading, shares of T-Mobile are fractionally lower to $77.86.
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