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Sprint's CEO still thinks he can have one of the top two networks by next year

Marcelo Claure said he can both cut costs and close the gap with rivals.

Asa Mathat for Re/code

Marcelo Claure’s goal of achieving the No. 1 or No. 2 network was bold when he made it at last year’s Code conference.

A year later, as Sprint is making billions in spending cuts, it now seems a herculean task. Nonetheless, Sprint’s CEO insists he can still reach his target even as the company announced Tuesday that it expects to delay some capital spending from this year to next.

“The goal has not changed,” Claure said Tuesday in a conference call with reporters after its quarterly earnings report. “We are determined to reach that.”

Specifically, Sprint has said it wants to be No. 1 or No. 2 in 80 percent of the country’s largest metropolitan areas by next May at the latest. And while it has recently improved its position in some markets of late, the company is still seen as having a long way to go and, in many places, has the weakest network of the four major carriers.

Plus, as part of Tuesday’s earnings announcement, Sprint said it was cutting its planned capital expenses by $2 billion over prior estimates, from around $5 billion to around $3 billion.

Some see that as a sign that Sprint is more concerned with saving cash than investing in its future.

“We are assuming the goal is to keep the company solvent with the hopes of merging with [T-Mobile US] in future,” New Street Research analyst Jonathan Chaplin said in a research note.

However, Claure says the capital budget change is due not to lowered ambitions but to challenges the company has had in getting zoning approval for some of the new poles it is erecting. Sprint’s network plan involves boosting its cell coverage through small cells and lessening its reliance on traditional large-cell installations owned by the nation’s tower providers.

Sprint is working with Mobilitie, a little-known Newport Beach, Calif.-based company. Various cities throughout the U.S. have challenged some of the pole designs that Mobilitie has put forth. Neither Sprint nor Mobilitie has commented on the work the two are doing together.

Claure said he is focused on finding the best way to improve each location in each city rather than just writing a big check to the top equipment providers, which he said was how Sprint approached past network upgrades.

“We are just being smarter about how we are doing it,” he said.

As for the business, Claure said the company is paring its losses even as it gains customers, though it didn’t add as many new smartphone subscribers as some analysts were expecting. The company also lost $2 billion last year, though Claure notes that was down from $3.3 billion in the prior year.

“I’m not proud of losing two billion,” he said, adding the day will soon come when it posts positive net income, in addition to the operating profitability it has already achieved.

Claure said the company plans to open 1,000 stores this year, both corporate-owned and in partnership with the U.K.’s Carphone Warehouse.

Claure also said that the worst of the company’s layoffs should be behind it, with no plans for major job cuts this year. Last year, Sprint cut thousands of jobs as part of an effort to cut $2.5 billion in operating costs.

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