T-Mobile revealed on Thursday that it intends to fire 5,000 workers, or around 7% of its whole workforce, over the next five weeks.
CEO Mike Sievert wrote to employees on Thursday that the layoffs will primarily affect corporate and back-office positions that are “primarily duplicative” of other responsibilities and will thin out the company’s middle management layers. The business also intends to cut back on its expenditures for “external workers and resources,” but the direct-contact customer-facing retail and “consumer care” employees won’t be impacted, he said.
“What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago,” said Sievert.
Reported sales down 2.5% year over year
T-Mobile’s layoffs follow months of major layoff notifications from a variety of other technological companies, including Microsoft and Meta, as businesses struggle with an unstable economic climate.
T-Mobile reported sales down 2.5% year over year and net subscriber additions down slightly from the same period in the prior year in its most recent quarterly earnings report last month, but it also announced record-low customer turnover and profit growth. Since last August, T-Mobile’s stock price has decreased by more than 7%. Following the announcement of layoffs, shares were trading lower by about 1%.
In the letter sent on Thursday, Sievert stated that T-Mobile has been striving to consolidate the combined operations and quicken the expansion of its high-speed internet business in the three years since the deal to buy rival carrier Sprint was finalized.
Meet shifting customer expectations
In order to meet shifting customer expectations in the future, he added, “it is clear that doing everything we are doing and just doing it faster is not enough.” The changes made today are all focused on helping us narrow our attention to a small number of effective tactics.
By the end of September, T-Mobile intends to inform all affected employees. In a securities statement on Thursday, the business stated that it expects to take a pre-tax charge of $450 million in the September quarter as a result of the reductions.
According to Sievert, affected employees will be given “competitive severance packages” depending on length of service, as well as expedited stock vesting, access to services for career transition, and other benefits. He continued by saying that the business does not want to make further, significant cuts to its personnel