When: Tonight, March 22nd at 6PM & 11PM ET

Where: CNBC’s “Mad Money w/Jim Cramer

Following is the unofficial transcript of a CNBC interview with Dan Hesse, Sprint Nextel CEO, today on CNBC’s “Squawk on the Street” at 10:45AM and tonight on “Mad Money w/Jim Cramer” at 6PM & 11PM ET.

All references must be sourced to CNBC.


JIM CRAMER reporting: Joining us first on CNBC is Dan Hesse, the CEO of Sprint Nextel. I got to tell you, we are--we are--we are very lucky to be down here at CTIA. I didn't think we were going to be seeing this much action.

Dan Hesse, let's just go right to it.

Mr. DAN HESSE: Sure.

CRAMER: New York Times, front page. Little to cheer for consumers in AT&T deal, true or false?

Mr. HESSE: True.


Mr. HESSE: Well, you--if you take a look at the market power of the big two, in postpaid, which is contracts, the way most users think of the business, 2005 the big two had 52 percent market share. They've expanded that now with acquisitions in the last few years, up to 67 percent. If this transaction goes through you're talking 79 percent, or roughly 80 percent of the market controlled by two companies. I think that's a little too much--too much concentration.

CRAMER: But, Dan, I was on the conference call yesterday with AT&T. They're talking about five companies in most areas, they're talking about five competitive companies, including Metro PCS. They're talking about Leap. They're saying that that's what we should be looking at, that's what the Department of Justice should be looking at. You're looking at it too narrow.

Mr. HESSE: Well, if you even look at total revenues, you know, which takes everybody into consideration, every customer into consideration, after this deal's done in, if they--if they did this deal, if it--if it's approved by the DOJ and the SEC, you're talking 74 percent of the market of all the wireless revenues in the US market being controlled by two companies. These companies--other companies are very small, and they tend to be very niche players and carriers like prepaid.

CRAMER: Well, if that's the case, then isn't it possible that the Department of Justice will stop it, yet AT&T agreed to pay $3 billion if it's blocked. I mean, that's a pretty much of a done deal. You wouldn't offer that much money. What do they know that we don't know?

Mr. HESSE: I don't know. You'll have to ask Ralph.

CRAMER: And I will later tonight on "Mad Money." All right, we're at CTIA, which is a celebration of innovation, which is a celebration of how far America has come.

Mr. HESSE: Yeah.

CRAMER: When I go on Twitter, I see people telling me, `You got to ask Dan Hesse why we're so far behind everybody, that we're way behind Europe, that we're way behind Asia.' True?

Mr. HESSE: False. The US is by far, unquestioned, it's the leader in wireless today. You know, when we started with 1G, which was analog to car phone, the cell phone was invented here, we were number one. With 2G, digital, GSM, Europe took the lead. With 3G, which is the first broadband data, Asia took the lead. With 4G, there's more 4G deployed in the US than anywhere else. If all—if you also look at the other areas of growth, operating systems, smart phones, 75 percent of the growth from North American smart phone companies--Apple, Android, RIM, Palm--applications, the other fast-growing area, 50 percent of the app revenues come out of the US. And I've talked to--I talk to everybody in the industry worldwide--carriers, you know, manufacturers--everyone believes the US is numero uno in terms of wireless innovation and where the US wireless market is.

CRAMER: All right, I'm putting my stock hat on for a second.

Mr. HESSE: Yeah.

CRAMER: If I am AT&T, here's what I want to do. Initially, I want to go to the Department of Justice and say I want to keep prices low, then I make them so low that you can't refinance, that you can't do the next step that you need to do with your infrastructure, whether it be what they--the two competing--the two systems that don’t work out well or with what you may have to do with Clearwire. And then after the--I've wiped you out, then I raise prices. Disaster scenario, but a possibility, right?

Mr. HESSE: Yeah, but on the--on the one hand, anything's possible, and—but I don't think that AT&T or Verizon, I mean, they would--they really would want to see some level of competition, or they're going to get more regulation than they currently have which is not in their interests or anybody's interests. You know, even though we are--we would be relatively small compared to AT&T or Verizon, we're still a fairly good-sized company at $36 billion in revenue, 50 million customers.

CRAMER: Right, right.

Mr. HESSE: And customers don't choose a carrier based upon their size. But it does give them tremendous scale economies, cost of goods, whether they're buying a handset or putting a network or what have you, which gives them a competitive advantage. So you paint a, you know, a scenario that is possible, but I don't think it's happening.

CRAMER: Well, but how about this? One of the reasons why I think that your stock maybe shouldn't go down any lower is if they're going to get this deal done, they are going to have to make concessions. Can you--if you look like this deal is going to be done, say, `Look, why don't you pay for the Clearwire buildout so we can remain a competitor?' What will you ask for just—from Justice if you think this deal could get through?

Mr. HESSE: Well, there's a number of areas that are problematic, even today, even if the deal doesn't go through that I think would absolutely be required if the deal were to go through. The vertically integrated companies, the landline companies--Verizon, AT&T--not only are they competitors of ours, they control so much of our cost of goods, if you will. It's called access to the cell site.

CRAMER: Right.

Mr. HESSE: Roughly a third of our costs of operating the cell site goes to AT&T and Verizon, who's--to pay for access. And those rates are usurious. They're very, very high. And so we would hope to see Our back hall costs come down dramatically, at a minimum.

CRAMER: All right. Daniel, I'll tell you what, we're going to take a break here. We are going to have more questions for you, but this is a family show, and I think that they would play much better in the twilight hours. So we're going to save the rest of this for "Mad Money" on tonight at 6 and 11.

Mark and Erin, back to you.


CRAMER: Welcome back to "Mad Money." Dan Hesse, CEO of Sprint Nextel and the chairman of CTIA, where I am at right now, is here with me.

Dan, welcome to "Mad Money."

Mr. HESSE: Thanks, Jim. Good to be here.

CRAMER: All right, Dan, where were you when it happened? It was Sunday afternoon, and you--tell me.

Mr. HESSE: I was actually here in Orlando on vacation. And when I--when I learned about it on Sunday afternoon.

CRAMER: Were you shocked to learn that ATT is going to buy T-Mobile?

Mr. HESSE: Yes, I was.

CRAMER: Were you shocked there was a possibility, according to some wire services and Bloomberg, very reliable news source, that you were in talks with Deutsche Telecom at the time.

Mr. HESSE: Well, I can't comment on the rumors and speculation that...

CRAMER: Why it’s all past tense now!

Mr. HESSE: But it was surprising because, quite frankly, I didn't think that it would be possible for, let's say, one of the big two to acquire even number three or four.

CRAMER: I mean, when--I mean, you have antitrust lawyers that you're involved with, I mean, did anyone even think that this is the kind of deal that the Justice Department wouldn't just immediately say, `Forget about it'?

Mr. HESSE: Well, we really hadn't considered the possibility.

CRAMER: Right.

Mr. HESSE: We thought that the likelihood of something like this happening was very remote, so we, you know, we do a lot of scenario planning. That one was not on the radar screen

CRAMER: USA Today, which I regard as the voice of many people in America, they read with a headline that says "AT&T deal raises fears of higher charges." You have been the leader in price. Is this story true?

Mr. HESSE: Well, we'll have to see what happens. There's no question it creates, you know, in essence a lot of concentration in the hands of just two companies. You know, back in 2005 you had, you know, 52 percent of the business, if you will, in terms of subscribers, postpaid subscribers in the hands of two. That's now 69, if this deal--or 68, 67, I guess. This deal is done, it's 79 percent. Tremendous amount of, if you will, market power would be held by just two companies.

CRAMER: Sprint is known as an innovator. You are introducing a huge number of products. You're down here at CTIA, you got a lot of great stuff. You also had a great quarter, and you added--you made a major change, you are really back. Do you think that your strength has actually allowed an ATT to even contemplate doing this deal because you're back, they can't steal—you cannot say, and they can't say, `Oh, boy, you know what, we're take--I know we have a weakened competitor.' You've had a monster number.

Mr. HESSE: Well...

CRAMER: Is it your own undoing?

Mr. HESSE: Well, thank you. I'd like to think that our success perhaps played a role in this.

CRAMER: It did, didn't it? Yeah, I think so, too.

Mr. HESSE: Yeah. It did.

CRAMER: You have got the best pricing in terms of being able to, yeah, just be able to take advantage of some of these incredible different changes on the Web, like a Netflix. But you know what? I think Netflix--and I'm using that as a metaphor--it could be March Madness, it could be YouTube...

Mr. HESSE: Yeah.

CRAMER: ...has really changed the equation and that some people are using all--they're using all the bandwidth. Why aren't we paying for that?

Mr. HESSE: Well, the, you know, it's going to be an issue for us in terms of the pricing model going forward.

CRAMER: Particularly for you because you have been a great price leader.

Mr. HESSE: Absolutely. Yeah, and what we've tried to do is give simplicity to our customers so that they get, in essence, unlimited data...

CRAMER: Right.

Mr. HESSE: ...text, voice, you know, all on, you know, a very predictable bill. And we have to look at usage very closely. What we did recently, earlier this year, is rather than meter and do things like slowing customers down, we increased the price for new customers--not to existing customers, for the unlimited data plan by $10. So we want to still have that simplicity, we know that's what our end users want. We know that's what they're used to in their home Internet experience. So we'd like to keep unlimited for as long as we possibly can, but we are watching, if you will, these increased data usages very closely.

CRAMER: All right, when you. get a behemoth like an ATT

Mr. HESSE: Yeah.

CRAMER: ...ATT merging with T-Mobile, you do run the risk that they have so much scale that they can be in control. Could they tell device makers, `Look, we don't want you to be of--you know, we want the best deals, we want the first deals, and leave little old Sprint behind'?

Mr. HESSE: Well, there's no question there's an issue. If you are a carrier and you have enough volume, you can get exclusive devices, you can get all sorts of great terms and conditions done with the deal, and that gives--that's one of the elements of market power that would concern me the most, that the two large carriers would be so large they could commit to enough volume to basically restrict Sprint's access. Now, I don't think that any regulation in this regard is required at this point today because of our innovation with Sprint and because of what you mentioned, our improving numbers, improving growth in terms of Sprint subscribers and what have you. On 3G and 4G devices, we have a very, very strong position, a terrific lineup. I would say our device lineup is second to none. At this show we'll be announcing our 22nd 4G device. So we have device leadership, but you can't predict what would happen if the big two got too big.

CRAMER: Now, if the big--if ATT gets together and they get this deal with T-Mobile, there really isn't anybody you can merge with. I know that's one of the reasons why I think the stock went down. Is it game set match, or do you have to be in there doing a deal right now to be able to make it so the Justice Department says, `The heck with it, we're not going to let any deal happen'?

Mr. HESSE: Well, I think what it, in essence, a lot--what a lot of people have said is, if you basically--if you approve this deal, AT&T-T-Mobile, in essence you're approving the possibility of Sprint and Verizon. It'd be pretty hard not to do that one. And then that number of 79 percent becomes 94 percent in the hands of two. So that's a--that's not a scenario that's good in a competitive market. I guess if I look at the glass half full element of it, and I'll say this a little tongue-in-cheek, but if you take a look at the, you know, the rationale that AT&T gave for why they made the purchase, which was spectrum if you were just to take a look at Sprint's spectrum assets vs. T-Mobile’s, if you were to look at our trajectories in terms of subscribers and metrics vs. T-Mobile's, and they're worth 39 billion, what should we be worth?

CRAMER: I think that's the question of the day.

Mr. HESSE: Yeah.

CRAMER: And I know it makes it so it's very hard to do a deal, now that we've got this $39 billion price tag for someone your size to be able to do it…

Mr. HESSE: Yeah.

CRAMER: get a deal together. Dan Hesse, thank you so much for coming on "Mad Money." Dan, CEO of Sprint, and also he's chairman of what we're at, CTIA. Stay with Cramer.

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