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Year one of the pandemic saw 55,000 net job cuts at the world's largest operators headquartered in the Americas and Western Europe.

Iain Morris

June 2, 2021

15 Min Read
'Big 20' telcos have cut 230K jobs, 12% of total, in five years

One consequence of the desperate plunge into content by AT&T and Verizon is that many thousands of jobs have been scrapped by the debt-ridden US operators in the aftermath of their disastrous deals.

Since 2018, when it finalized its $85 billion takeover of Time Warner, AT&T has shrunk its organization by nearly 37,500 employees. Following its ill-fated, $4.5 billion purchase of Yahoo in 2017, Verizon has cut its headcount by more than 23,000 people.

Yet toxic deal-making is unlikely to have been the sole explanation for the layoffs, merely forcing AT&T and Verizon to amputate even bigger body parts. The supporting evidence is a comparison with other Tier 1 service providers headquartered in Western Europe and the Americas.

Of the 20 that Light Reading monitors regularly, only two – Canada's Telus and the UK's Vodafone – grew their payrolls last year. The net reduction across all 20 was about 55,000 jobs, making it the worst year since 2016 for telecom-sector employees.

Figure 1:

While that equals only about 3.3% of the overall headcount at these companies, the toll since 2015 is far greater. In five years, some 230,000 jobs have disappeared, meaning the combined workforce is 12% smaller than it was in 2015.

Headcount has been steadily eroding as operators have sold assets, pooled resources and made the pursuit of efficiency their number-one priority. Automation alone appears responsible for thousands of job losses, allowing companies to run operations with far fewer people.

The jobs trend stems largely from the industry's financial plight. Despite investing heavily in 5G and other capital-intensive projects, telecom operators have struggled to generate any meaningful sales growth for years.

Shareholders have been disappointed by the returns, while industry debts have mounted. AT&T's share price has lost nearly a third of its value in the last five years. In the UK, Vodafone's is down 44% over the same period.

Automation nations

In these conditions, managers have built their strategies largely around generating cost savings – one way or another – to inflate margins, pay off their loans, free up cash for continued network deployment and secure dividends for shareholders.

As a major component of these cost-saving efforts, cutting jobs without endangering sales is easier than ever thanks to customers' growing enthusiasm for buying phones and services online rather than in a physical store. The pandemic has undoubtedly helped.

But so has technology. The network operations center (NOC), the brain of the system, used to bustle with people like a beach on the first day of summer. Today's most advanced facilities are as deserted as a shopping mall during lockdown.

In this "zero touch" environment, fully automated software programs run networks with minimal human involvement. Vodafone told Light Reading in late 2019 that automation had already claimed hundreds of jobs within its NOCs. Its expectation was that only a "small number" would remain by the mid-2020s.

2015

2016

2017

2018

2019

2020

America Movil

195,475

194,193

191,851

189,448

191,523

186,851

AT&T

281,450

268,540

280,000

268,220

247,800

230,760

BCE

49,968

48,090

51,679

52,790

52,100

50,704

BT

102,500

106,416

105,787

106,742

105,344

99,741

CenturyLink

43,000

40,000

51,000

45,000

42,500

39,000

Deutsche Telekom

225,243

218,341

217,349

215,675

210,533

226,291

-T-Mobile US

50,000

50,000

51,000

52,000

53,000

75,000

KPN

14,078

13,530

13,275

12,431

11,248

10,102

Level 3

12,500

12,600

0

0

0

0

Millicom

15,956

17,985

19,127

21,403

22,375

21,419

Orange

156,191

155,202

151,556

150,711

146,768

142,150

Proximus

14,090

13,633

13,391

13,385

12,931

11,423

Rogers Communications

26,200

25,200

24,500

26,100

25,300

23,500

Sprint

30,000

28,000

30,000

28,500

27,000

0

Swisscom

21,637

21,127

20,506

19,845

19,317

19,062

Telecom Italia

65,867

61,229

59,429

57,901

55,198

52,347

Telefonica

137,506

127,323

122,718

121,853

117,347

113,182

Telenor

38,000

37,000

30,800

20,832

20,044

18,000

Telia

26,895

26,017

25,021

20,836

21,232

20,741

Telus

47,700

51,300

53,600

58,000

65,600

78,100

VEON

52,321

41,994

39,938

46,132

46,492

43,639

Verizon

177,700

160,900

155,400

144,500

135,000

132,200

Vodafone

111,684

111,556

106,135

98,996

95,219

96,506

Source: Companies, SEC filings. Notes: End-of-year figures were used unless unavailable, in which case year-average numbers were used; Level 3 was acquired by CenturyLink in 2017; T-Mobile and Sprint merged in April 2020.

There is definitely more to come. One recent trend on the mobile networks side has been the sharing of not only mast sites but also the equipment that adorns them.

Open RAN, an in-vogue network technology that improves interoperability between vendors, will make this sharing even easier, according to Arnaud Vamparys, the senior vice president of radio networks for France's Orange.

"We have been able to bring more flexibility thanks to open RAN architecture," he says.

"This flexibility can be in terms of network sharing – sharing different parts between operators."

By reducing the number of basestations across a given market, operators could also make do with fewer staff for purchasing, installation and maintenance. Telco partners could divide responsibilities geographically, for instance.

Still, much of the pruning in recent years has come as operators have removed duplicate roles following takeover activity, or simply divested assets.

The sale of a business unit does not destroy jobs unless the buyer subsequently makes cuts. In the case of Norway's Telenor, for example, about 8,000 jobs have disappeared from the payroll since 2017 because units were sold in central Europe and Pakistan.

Similarly, Vodafone's deconsolidation of its Indian business explains most of the headcount drop in 2019, when it dispensed with nearly 4,000 employees.

The great telecom sell-off

All that said, divestment activity accounts for only a share of the 230,000 net job cuts since 2015. Nor have the "big 20" exclusively been sellers, as the US operators demonstrate.

Staff numbers across AT&T and Time Warner would have equaled about 280,000 at the end of 2017, several months before the takeover was finalized. By December 2020, just 230,760 were left. Headcount at Verizon dropped from 177,700 in 2015 to 132,200 last year.

After its merger with Sprint, T-Mobile US, now the second-biggest mobile operator in the US (behind Verizon), has also been cutting jobs, despite promising it would create them.

Data extracted from filings with the US Securities and Exchange Commission shows that T-Mobile and Sprint had about 80,500 employees in 2018, when they were trying to persuade competition authorities to let them merge. Last December, there were roughly 75,000 on the T-Mobile US payroll.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

The attrition has been even worse at some European operators. Outside the US, Deutsche Telekom, T-Mobile's main parent, has cut nearly 24,000 full-time jobs since 2015, nearly 14% of the total.

Spain's Telefónica has shed a similar number of jobs over the same period, meaning its workforce is 18% smaller. At Telecom Italia, more than one in five jobs has vanished. And as for Telenor, its cocktail of automation and divestment has lightened it by 20,000 employees since 2015, more than half that year's total.

Telenor has also been the most successful at boosting productivity. Between 2015 and 2020, its annual revenues per employee more than doubled to about $820,000 (using today's exchange rates), as Telenor managed to generate healthy sales with a much smaller workforce.

It is almost religious about automation. By 2023, it wants to have what it calls "touch-free operations," relying on artificial intelligence to help detect and fix problems.

2015

2016

2017

2018

2019

2020

America Movil

228,813

251,379

266,500

274,267

263,232

272,369

AT&T

521,585

609,965

573,214

636,791

731,207

744,323

BCE

356,463

373,829

363,899

368,293

378,338

373,886

BT

262,388

320,572

317,125

311,092

307,776

302,728

CenturyLink

416,279

437,500

347,059

501,778

504,894

531,077

Deutsche Telekom

375,343

409,030

421,015

428,815

467,142

545,285

-T-Mobile US

649,340

749,800

796,157

832,885

849,019

911,960

KPN

607,478

614,023

598,208

554,204

595,873

637,953

Level 3

536,000

642,857

N/A

N/A

N/A

N/A

Millicom

392,580

224,798

205,782

184,367

193,788

194,734

Orange

314,444

321,958

331,316

335,451

351,597

363,295

Proximus

520,252

528,730

529,162

525,839

537,215

585,996

Rogers Communications

423,713

450,390

485,880

479,170

493,569

490,586

Sprint

1,072,667

1,190,964

1,080,200

1,178,947

N/A

N/A

Swisscom

602,378

611,646

635,602

657,558

660,480

648,686

Telecom Italia

365,403

379,114

407,043

399,639

397,894

368,872

Telefonica

487,780

498,965

517,689

488,207

503,903

464,977

Telenor

405,445

426,797

486,787

611,065

681,513

819,886

Telia

389,055

391,076

385,446

484,729

489,385

519,770

Telus

217,100

206,710

205,568

205,228

185,114

164,025

VEON

183,483

211,935

237,869

196,957

190,635

182,864

Verizon

740,574

783,095

811,030

905,882

976,800

970,439

Vodafone

544,768

521,300

536,415

538,889

577,047

554,603

Source: Companies, SEC filings. Notes: All currency conversions are at exchange rates published this week; calculations used end-year employee numbers, as shown in the previous table, unless these were unavailable, in which case year-average numbers were used.

Some operators, unfortunately, have witnessed a decline in revenues per employee despite cutting headcount. At Telefónica, the figure dipped from about $518,000 in 2017 to $465,000 last year, as headline sales fell. But the metric would obviously have been much worse if the Spanish operator had not taken such a heavy axe to its workforce.

As operators are judged on their efficiency programs, investors are paying closer attention to revenues per employee as a measure of success.

Automation's apologists often insist jobs culled in one area will spring up elsewhere, but the evidence so far is that not all the lost jobs have replacements within the sector. A 12% drop in just five years is a big one considering that few greenfield networks are providing alternative sources of employment and that telecom vendors are also feeling a squeeze.

The contrast is supplied by Amazon, Google and Microsoft, which collectively hired another 1.2 million workers between 2015 and 2020.

For people like Axel Clauberg, who quit a senior technology job at Deutsche Telekom in 2019 to join AWS, a future outside telecom could beckon in the world of big tech. Like IT systems and network functions, some employees seem to be ultimately bound for the public cloud.

Related posts:

— Iain Morris, International Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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