Daniel R. Hesse, president of AT&T Wireless Services Inc., said he is leaving the company to head a Seattle-based Internet start-up called TeraBeam Networks. Mohan Gyani, AT&T Wireless’ chief financial officer and former CFO of AirTouch Communications, will replace him.
Hesse is leaving as AT&T Wireless prepares for its initial public offering-potentially one of the biggest initial public offerings in U.S. history in terms of money raised. The IPO, set to commence sometime this spring following a shareholder vote on March 14, will sell off about 19 percent of AT&T Wireless, raising approximately $10 billion.
Some analysts speculate that Hesse’s disappointment in being passed over for the position of AT&T Wireless’ chief executive officer-a title that went to AT&T’s former president and general counsel John Zeglis-is partly to blame for his departure. The Wall Street Journal reported Hesse could be surrendering as much as $50 million, mostly in stock options, by departing before the IPO is executed.
Speculation also has circulated that Hesse’s departure will affect the timing and price of the upcoming IPO, but AT&T spokeswoman Adele Ambrose said the management shift will have little to no impact.
AT&T shares were trading at $53.87 at RCR press time, up $1.25 from the previous day’s close.
Hesse, a 23-year veteran of AT&T, will assume control of TeraBeam, a new company developing a technology that transfers data by laser, sometimes referred to as “fiberless optics.”
He is expected to get a 4-percent to 5-percent ownership stake in the company, which is set to make its debut this week at the PC Forum conference in Scottsdale, Ariz.
Hesse took over AT&T’s wireless unit in 1997. Three years prior, AT&T entered the wireless game with its purchase of McCaw Cellular Communications Inc. for $11.5 billion.
Fearful of hurting its long-distance business, AT&T waffled in the wireless market until Hesse fought for and won approval to eliminate the company’s wireless roaming fees and establish a national calling plan. What resulted was the hugely successful Digital One Rate plan that consequently became the model by which most wireless carriers now provide service.
By most accounts, Gyani will have a lot to live up to, but he comes to the new position with an extensive resume, including being one of the leaders in the $120 billion merger of Vodafone and AirTouch and the subsequent $70 billion joint venture with Bell Atlantic Mobile, said AT&T.
Zeglis said Gyani’s accomplishments have “earned him an enviable reputation with Wall Street and shareholders.”
