Sprint to cut up to $2.5 billion in costs, layoff workers in next six months

October 05 00:48 2015

Sprint recently tumbled behind T-Mobile into fourth place among U.S. wireless carriers. And now Sprint CEO Marcelo Claure has the company on the verge of drastic cost cuts. Sprint said that it plans to significantly reduce spending, but it didn’t specify dollar amounts or how many of the company’s 31,000 employees might be at risk.635587240660763306-B01-SPRINT-06S-66176720

The Wall Street Journal reports that Sprint could slash as much as $2.5 billion over the next six months and that layoffs are likely.  In an internal memo cited by the Journal, Sprint Chief Financial Officer Tarek Robbiati wrote that cuts “inevitably will result in job reductions,” and that employees must watch every expenditure. “The main thing to consider when requesting to spend money is to take an owner’s mindset by treating every dollar as if it were your own,” Robbiati wrote in the memo.

Sprint confirmed that it was “likely that some jobs will be impacted,” adding that it was “premature to discuss the details as we are in the early stages of the process.” “This is a difficult process and we won’t make decisions lightly. Whatever decisions are made, we will inform our employees first and treat any impacted employees with dignity and respect,” said Sprint spokesman Dave Tovar in that emailed statement. “We believe the steps we are taking across our business are critical to ensuring Sprint is a viable, successful and sustainable business for the foreseeable future.”

Roger Entner, a telecom analyst with Recon Analytics says that Sprint needs to do more than slash costs. “The answer to Sprint’s woes is not cost cutting,” he says.  “What Sprint needs is true market differentiation.” The company also said it wouldn’t participate in the wireless spectrum auction slated to take place next year. Even sitting the auction out, Entner says that Sprint has more spectrum than its rivals, an area he says Sprint should focus on. Wall Street seemed to support the move to rein in costs. Sprint’s stock closed at $4.25 Friday, up 4.94%. During the three-month period that ended on June 30, 2015, Sprint’s net postpaid subscriber additions were 310,000 compared to net subscriber losses of 181,000 in the same period in 2014. Sprint is expected to report earnings for its second fiscal quarter in early November.