T-Mobile CEO John Legere’s possible departure to lead troubled office rental service WeWork burst into the open on Monday.
But the possibility of the move, first reported by the Wall Street Journal, has been circulating since shortly after WeWork’s co-founder Adam Neumann stepped down as CEO in September.
T-Mobile and WeWork declined to comment on Monday. WeWork is talking to several people about the CEO job including Legere, but the T-Mobile CEO is not the leading candidate, CNBC reported later on Monday.
Six weeks ago, Jeffrey Sonnenfeld, senior associate dean of Yale University’s business school, set off the discussion when he wrote an op-ed calling for WeWork to hire Legere. “What WeWork needs is someone new to the firm but with a track record of disaster recovery and entrepreneurship,” Sonnenfeld wrote on Sept. 26 on the web site of Chief Executive magazine. “Someone like John Legere of T-Mobile, who conveniently has a terrific relationship with WeWork’s major investor Softbank.”
WeWork, which withdrew its initial public offering this summer amid questions about its business model and corporate governance, and wireless carrier T-Mobile are different kinds of businesses, Sonnenfeld explained to Fortune on Monday. But Legere has the right relationships and skills to turn things around at WeWork, he said.
Before taking over at T-Mobile in 2012, Legere helped revive bankrupt telecom firm Global Crossing, and had successful management stints at Dell and AT&T. At T-Mobile, he took over a shrinking, fourth-place carrier and turned it into the fastest-growing player in the wireless industry for the past five years.
“If it was anybody but John, I’d say WeWork is circling the drain,” Sonnenfeld said. “This is a guy who really knew the finances when he was AT&T. He did the heavy lifting to fix Global Crossing. He has the skills to unravel these kinds of problems.”
Some mistake Legere’s outspoken style for lack of management acumen. Legere, who has 6.5 million followers on Twitter, frequently berates his rivals with colorful, and even off-color, quips. And he has a somewhat goofy weekly cooking show on Facebook. But he used price cutting and marketing to revive T-Mobile, while recruiting a team of top-notch executives to help execute his strategy.
Legere also has strong relationships with WeWork’s newly-appointed chairman Marcelo Claure, and Masayoshi Son, the CEO of WeWork’s largest shareholder, SoftBank Group. After the failed IPO, Son last month bailed out WeWork with $6.5 billion, including more than $1 billion for former CEO Neumann, in return for increasing SoftBank’s ownership stake to 80%.
Legere and Claure, who ran Sprint until earlier this year, were once bitter wireless rivals. But they made peace while spending months negotiating the proposed merger in 2017 and 2018. (In June, Legere tweeted a video of the pair scootering through Washington, D.C.) At the same time, SoftBank was the majority owner of Sprint, also giving Legere and Son an opportunity to bond. “Legere has a great relationship with Masa–surprisingly so,” says Sonnenfeld.
Inconveniently, Legere is busy trying to complete the $26 billion T-Mobile-Sprint merger. Federal regulators have approved the deal, announced in April 2018. But more than a dozen state attorneys general have filed a lawsuit in an effort to block the acquisition, saying that it will hurt competition. That trial, which could drag on for months, is to begin Dec. 9, and may be followed by court appeals.
Legere’s talks with WeWork may signal to investors that the Sprint deal is unlikely to be completed. The initial merger agreement, with a termination fee owed by T-Mobile, has expired. Legere said last week that the two sides were discussing whether to alter the deal’s terms, including the price.
The timing of the upcoming trial and restarted deal talks prompted analyst Walt Piecyk at LightShed Partners to call on both sides to deny the possibility of Legere leaving for WeWork. “It’s not favorable at all to have a press report like this just ahead of trying to close the deal,” Piecyk wrote on Monday. “T-Mobile should deny the report. In fact, given the risks it has added to the Sprint deal, SoftBank should deny it as well.”
On Monday afternoon, shares of T-Mobile, which had gained 26% this year, lost more than 2%. Shares of Sprint, already trading a substantial discount to the merger price, lost 4%.
