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T-Mobile's John Legere: The most dangerous man in wireless

T-Mobile CEO John Legere makes several big announcements in New York City in July, during the company's major press event.



(Credit: CNET/Sarah Tew)

John Legere, CEO of T-Mobile, had the room with his first F-bomb.

The event was last January's Consumer Electronics Show, and scores of reporters, bloggers, and photographers had come to hear what Legere had to say in one of his first public appearances since his appointment as CEO in September. Expectations weren't high. The audience, gathered in the typical Las Vegas convention center room showered in pink lights, had expected to hear the same "challenger" strategy that his predecessor had put forth the year before.

Instead, Legere (pronounced like "ledger") delivered a profanity-laden talk that seemed more fitting for a comedy club than a corporate press event. He called AT&T's network in New York City "crap" and quipped that capped data plans put a crimp on watching porn on phones.

His performance -- calling it a press conference isn't fair -- left the audience slack-jawed and impressed, as Legere juggled humor with salient points about the industry. Like other T-Mobile leaders before him, Legere promised to shake up the industry. This time around, the crowd believed the man in charge -- or at least that Legere was serious about a T-Mobile comeback.

"You left the room believing T-Mobile had some fire in the belly and could make a difference in the wireless market," said Maribel Lopez, an analyst at Lopez Research. "Frankly, you wanted them to make a difference, and he gave the audience hope."

T-Mobile put its competitors on notice late Wednesday when it reported adding the most valuable kinds of customers -- known as postpaid -- for the first time in more than two years. Its total customer gain was the most in four years.

"It's an incredibly strong demonstration of the momentum we are building," Legere said on a conference call today.

The growth was partly achieved by Legere's relentless quest to challenge the status quo in what he calls "a stupid, broke, and arrogant industry" -- a strategic and marketing push he calls the "Un-carrier." From eliminating contracts to allowing for earlier smartphone upgrades -- moves that have forced responses from his larger competitors -- Legere has shown that he can do more than talk the talk.

"He's putting people on notice," said Steve Largent, CEO of wireless trade group CTIA.

"You left the room believing T-mobile had some fire in the belly and could make a difference in the wireless market. Frankly, you wanted them to make a difference, and he gave the audience hope."
--Analyst Maribel Lopez

Legere has reason to be aggressive. T-Mobile is the last-place national carrier in a game where bigger is always better. At a time when AT&T and Verizon Wireless are using their considerable marketing muscle to cement their leadership positions, T-Mobile faces the daunting task of convincing subscribers to switch services.

So while T-Mobile still has a long way to go before declaring its comeback a success, it's on more solid footing when it comes to customer growth -- and for his part, Legere is enjoying the bad boy role.

"Anybody here from New York? Any of you use AT&T? Any of you who use them, are you happy? Of course not. Their network's crap," he said at the CES conference, before adding, "All in good fun, of course."

A strong telecom pedigree
Legere, 54, has taken great care to portray himself as an outsider among telecom executives, starting with the superficial. He let his hair grow and swapped suits and ties for a pink T-Mobile T-shirt, jacket, jeans, and hipster sneakers.

The implied image: He's just your average guy.

Behind the outfit, though, is a pedigree that could compete with that of any top wireless exec. Legere joined the old Ma Bell, the former telecom behemoth AT&T, after finishing Harvard Business School's leadership program. Back then, he was known for tailored suits paired with dress shoes with a high shine.

"John was very smooth and polished and meticulously groomed," said an executive who worked with him at AT&T but declined to be named.

He was described as determined and purposeful -- someone who wanted to climb AT&T's ranks quickly. During the course of his AT&T tenure, he ran the company's Asia-Pacific unit, its outsourcing program, and its global strategy and business development. While there, he at one point worked under now-Sprint CEO Dan Hesse.

"I liked to say I helped move his career forward," Hesse said in an interview with CNET. Legere, he said, was a strong performer.

After leaving AT&T, Legere joined Dell to run its Asia-Pacific operations before moving to run its businesses in Europe, the Middle East, and Africa.

In 2000, near the end of the dot-com boom, he headed to Asia Global Crossing, the Asian arm of a company that built a fiber-optic infrastructure to carry data across great distances, including oceans. A year later, he took over as CEO of parent Global Crossing, and ushered it from bankruptcy to recovery before selling it to Level 3 Communications in 2011 in a deal worth $3 billion.

"He was much more staid and conservative there, so it was something of a shock to see the 'new John' at T-Mobile," said Jan Dawson, an analyst at Ovum.

Like former manager Hesse, Legere stands as a head of one of the nation's four wireless carriers. Indeed, Hesse stood where Legere stands now, once a fresh-faced CEO with a struggling business to turn around. When he took over, Hesse was an energetic, wisecracking, Vans shoe-wearing face of Sprint, never afraid to mix it up with his rival executives (he once jokingly compared AT&T Mobility CEO Ralph de la Vega to presidential assassin John Wilkes Booth, then tried to brush it off as "a compliment").

But Legere has taken the digs up a notch.

"Sprint is the carrier that's really good at announcing a network rollout without actually rolling out a network," Legere said during his CES conference. Hesse wouldn't talk about Legere's comment but noted that Sprint has been transparent about its 4G LTE deployment.

"Anybody here from New York? Any of you use AT&T? Any of you who use them, are you happy? Of course not. Their network's crap."
--Legere at his CES press conference

Despite decades of wearing a suit and tie to work, Legere told CNET that his current job matches how he dresses and likes to look.

"I dress, act, behave, and speak the same as if I'm on CNBC, in the locker room, or out having a drink," he said in an interview today. "At this stage of my life, it's important to me. I am what I am."

In a recent e-mail exchange, Legere listed out that day's ensemble: pink Chuck Taylor sneakers, black jeans, and a Batman T-shirt. He's rocked hip Jimmy Choo and Alexander McQueen sneakers at past events. And yes, he confirmed that he does have a closet full of magenta and black T-Mobile tees.

Much of Legere's routine sounds like he's speaking off the cuff; he drops obscenities like other telco executives drop acronyms. He eschews the usual industry jargon. Nothing about his presentations looks rehearsed.

Which is one of his talents. While Legere may come off as spontaneous and a loose cannon, he is known for the advance work he puts into his public speeches. "There's a lot of thought that is put into his preparation and how he lands the points that he does," according to one person familiar with his process at T-Mobile.

Personal touch
Even back at AT&T, Legere showed a knack for knowing what to say, whether it was tapping into his experiences as a new father to build a connection or diving deep into a heavy technical discussion.

But at T-Mobile, he's raised his game. At the March "Un-carrier" event, where the company completely dropped service contracts, he rattled off his e-mail address and told customers to call him out on the carrier's problems. He recently joined Twitter, where he hasn't been shy about floating ideas for new ads mocking AT&T and Verizon, and directly reaching out to reporters and bloggers for their input.

Earlier this week, CNN's Jake Tapper tweeted to Legere that T-Mobile was charging the wife of a soldier killed in action three years ago for his account. Showing an unprecedented level of accountability for a telecom executive, he responded and apologized within the hour and resolved the issue less than two hours later.

Some of his antics fall flat. At an event in July, where T-Mobile unveiled its Jump early upgrade program, he had four American Girl dolls set up in chairs in a parody of the recent run of AT&T commercials featuring a spokesman sitting with four children. He attempted to mock the spokesman with fake conversations with the dolls but didn't elicit much of a reaction from the audience.

In interviews, Legere comes off as easygoing -- someone you wouldn't mind having beers with. He isn't above flattery either. In a meeting room after the "Un-carrier" event, he sidled up to this reporter and proudly showed off the CNET app prominently displayed on his new iPhone 5. More importantly, he genuinely comes off as having a good time.

"We're having a ball," he said. "We like to sit in the room to scheme ways to solve customers' pain points."

His energy has helped bolster the morale at a company whose employees have slogged through years of terrible results, layoffs, budget cuts, and the near takeover by AT&T.

"John brings energy and excitement to the company," Neville Ray, chief technology officer for T-Mobile, told CNET. "It's what we needed after such a tough period."

Chief Marketing Officer Mike Sievert, who joined T-Mobile a few weeks after Legere, told CNET the new CEO was a factor in his taking the job.

"He articulated a clear strategy in our first meeting," he said. "It was clear to me that he knew what role T-Mobile wanted to play and where he wanted to take it."

Sievert said Legere has been effective at "firing up" the T-Mobile employee base and quickly rallying them to a new direction (Legere also gave every employee shares of T-Mobile's stock).

Under Legere, "it's been nonstop action," he said.

T-Mobile's tough turnaround
T-Mobile will need all of Legere's charm and energy for the company to succeed. The elimination of contracts and the introduction of the iPhone lured new customers in the second quarter. At the end of July, he offered the option to customers of putting no money down on their smartphone (paying off the total cost in monthly installments).

The industry likely benefited from the shutdown of Sprint's Nextel network in the second quarter, causing a massive defection that led to subscriber gains for all.

Indeed, T-Mobile appeared to benefit the most, adding the most postpaid customers among the big four in the second quarter.

In the period, T-Mobile added 1.1 million net new customers, with 688,000 of them being higher value "postpaid" customers with a higher credit rating who pay at the end of each month. It's also the first time the company has reported results as an independent company and not as a unit of former parent Deustche Telekom.

That growth came at a cost. Even as revenue rose 27.5 percent to $6.23 billion -- above Wall Street expectations -- it swung to a loss of $16 million, compared with a year-earlier profit of $207 million. When excluding onetime items such as its deal with MetroPCS and other costs, it still saw its profits decline due to its aggressive marketing and upgrade costs.

With Sprint clearing up much of its distractions and focusing again on competing for subscribers, T-Mobile also faces another aggressive underdog competitor and a tougher second half.

T-Mobile said it expects to add 1 million to 1.2 million net postpaid customers for the full year, suggesting continued growth in the second half of 2013.

A more focused Sprint, however, is best suited to match up to T-Mobile on the prepaid side, with Boost and Virgin Mobile potentially poised to pick off customers from T-Mobile's MetroPCS prepaid arm. A few days after T-Mobile launched its early upgrade program, Sprint quietly cut the prices of its own plans and guaranteed unlimited data for the life of its customers' contracts.

"We'll just have to see how those rate plans work in the market," Hesse said. "We're taking a wait-and-see approach."

T-Mobile has come a long way from just a few years ago, when it was all but pronounced dead after the potential takeover by AT&T collapsed due to resistance from regulators. After months of rhetoric from AT&T and T-Mobile executives that T-Mobile was too weak to survive on its own, a lot of people began to believe it.

Read: Which device early upgrade option offers the best value?

Turns out, it wasn't true. And by slashing the prices of its plans and moving to a no-contract model, T-Mobile has shone a spotlight on the hidden costs of wireless service plans. It only helped Legere's case when a week later, AT&T and Verizon opted to copy T-Mobile's no-contract, early upgrade plans, but without a break in the monthly bill -- a fact that Legere isn't letting anyone forget.

AT&T has been Legere's favorite target because its customers can easily switch to T-Mobile with a simple swap of a SIM card (Verizon and Sprint customers would need to buy a new phone). And Legere hasn't been shy about touting its network vs. AT&T's coverage.

AT&T, of course, hasn't been amused.

"Either he's not informed, or he's purposely trying to twist the facts," AT&T Mobility CEO Ralph de la Vega told CNET in an interview in February. He went on to defend the coverage in New York, calling it "rock solid" and "a lot better by any measure than the T-Mobile network."

T-Mobile isn't afraid to publicly go after its rivals, because as the last-place carrier, it badly needs the attention. That makes it dangerous and unpredictable.

"We are witnessing what happens when the first credible price cutter arrives in an overpriced and saturated market," said Craig Moffett, an analyst at Moffett Research. "Be afraid. Be very afraid."

In an interview with CNET, Legere hinted at another big move that would further shake up the industry. He didn't provide any details, only calling it "Phase 3" (Phase 1 was the elimination of contracts and Phase 2 was the early upgrade program).

"This one will be more fun than the last two," he said. "I can't wait for them to get comfortable and spring this."

Positioning for a deal
As with Global Crossing, Legere's goal may be to beef up T-Mobile for a sale. Legere has been open about his interest in working with Sprint and Dish, and he told CNET an acquisition is always possible.

Regulators, Wall Street, and industry observers have long sought a combination between the smaller players to better compete against AT&T and Verizon. Dish's recent interest in Sprint and Clearwire suggests it may still want to get into the wireless business. T-Mobile may be an attractive option for the satellite-TV provider.

Should Legere end up selling T-Mobile, however, some in the industry will miss him at the helm.

"He's a CEO who is going to stir things up," said Largent. "That's a good thing."

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