'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.
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.
Table 1: Headcount at major service providers
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| América Móvil | 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 |
| Telefónica | 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.
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 $820,000 (using today's exchange rates), as Telenor managed to generate healthy sales with a much smaller workforce.
It is almost religious about automation. By 2023, it wants to have what it calls "touch-free operations," relying on artificial intelligence to help detect and fix problems.
Table 2: Revenues per employee ($)
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| América Móvil | 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 |
| Telefónica | 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:
- Big telcos have cut headcount by 9% since 2015
- With its shiftiness on jobs, T-Mobile's 'Uncarrier' image is wearing thin
- Deutsche Telekom job cuts hit 20K since 2015 as pace ratchets up
- AT&T to shed 4,700 jobs as part of $6B savings plan, says labor union
- Telco staff face crisis as cuts claim 127K jobs at big CSPs since 2015
— Iain Morris, International Editor, Light Reading
