Over the next five weeks, T-Mobile plans to lay off 5,000 employees. This equates to 7% of the company’s staff. Mike Sievert, T-Mobile CEO, notified employees about the decision in a letter sent out on Thursday.
Reduction in the Company
A major portion of the positions being terminated affect corporate and back-office jobs that are “primarily duplicative” to other roles. Additionally, it will reduce T-Mobile’s middle management layers, stated Sievert’s letter. Furthermore, the telecommunications company also plans on reducing its spending on external resources and workers.
Sievert went on to assure those who work directly with the customers, saying they will not be affected. For example, people who work in the retail and “consumer care” fields are safe from being laid off. The T-Mobile CEO added, “What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago.”
Since this time last year, T-Mobile stocks have fallen more than 7%. After news of the company’s plans to downsize, shares started trading down around 1%. The company reported its sales have dropped 2.5% year-over-year and net customer additions fell slightly from the same period in the prior year.
Time to Focus
The CEO’s letter explained that T-Mobile needs to start narrowing its focus. It has been three years since the company closed the deal with Sprint. Since then they have worked to accelerate its high-speed internet while combining the two companies.
“It is clear that doing everything we are doing and just doing it faster is not enough to deliver on these changing customer expectations going forward,” Sievert stated. The decision to downsize is “about getting us efficiently focused on a finite set of winning strategies” he added.
The company plans to notify the employees who will be let go by the end of next month. T-Mobile estimates it will incur a pre-tax charge of $450 million in the September quarter. They released this preemptive estimation in the company’s securities filing on Thursday. Of course, T-Mobile believes the pre-tax charge will occur due to the reductions it is planning.
Compensation
Additionally, those who are let go will receive “competitive severance packages” based on tenure. In addition to other benefits, they will also be given accelerated stock vesting and access to career transition services.
In his letter, Sievert stated that T-Mobile does not have any further widespread employee reductions in the foreseeable future.
By Sheena Robertson
Sources:
CNN: T-Mobile to lay off 5,000 employees
The Seattle Times: Bellevue-based T-Mobile to lay off 7% of workforce
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