Leading telcos in Europe and US have cut 292K jobs since 2015

Telenor is like one of those before and after photo compilations of extreme dieters – people who have lost half their body weight in several months by eating leaves and avoiding fun.

In its before shot, taken in 2015, the Norwegian telco sprawled across Europe and Asia with about 38,000 employees. The after image of last year shows a company that has shrunk back to its European core, employing as few as 16,000 people.

It is arguably in fitter shape than ever before. Although headcount has plummeted 58%, annual revenues have fallen just 14% over this period. Profitability, as measured by EBITDA (earnings before interest, tax, depreciation and amortization), has soared.

Telenor's EBITDA margin is up from 34.5% in 2015 to 44.6% last year. Using today's exchange rates, its sales-per-employee metric has risen from about $356,000 to more than $727,000 between these years.

Headcount and revenues per employee ($) at 'big 20'
(Source: Companies, SEC filings. Notes: All currency conversions are at exchange rates published this week; operators include America Movil, AT&T, BCE, BT, CenturyLink, Deutsche Telekom, KPN, Millicom, Orange, Proximus, Rogers Communications, Swisscom, Telecom Italia, Telefonica, Telenor, Telia, Telus, VEON, Verizon, Vodafone)
(Source: Companies, SEC filings. Notes: All currency conversions are at exchange rates published this week; operators include América Móvil, AT&T, BCE, BT, CenturyLink, Deutsche Telekom, KPN, Millicom, Orange, Proximus, Rogers Communications, Swisscom, Telecom Italia, Telefónica, Telenor, Telia, Telus, VEON, Verizon, Vodafone)

Selling workforce-heavy businesses in low-income markets like India and Myanmar has been a healthy move, of course. But few other operators have shown quite as much zeal for automation.

Quizzed about the workforce impact in 2020, CEO Sigve Brekke told analysts that infrastructure modernization and other "digital" changes would produce "small organizations" in the sector. "Touch-free" was Telenor's preferred euphemism at the time for this vision of networks that effectively run without human interference.

If Telenor stands out as a pioneer, many of its European and North American peers have also caught the automation bug. Net job cuts at 20 Tier 1 operators regularly tracked by Light Reading hit a five-year high of nearly 62,000 in 2021, about 4% of the total.

Since 2015, those same companies have slashed their collective headcount by nearly 292,000 employees, or roughly 16%. Mergers, acquisitions and divestments do account for many thousands of these cuts. But other jobs have fallen victim to upheavals in technology.

Automation for the people

How low could headcount go? Japan's Rakuten is a possible guide. Its newly constructed mobile network in Japan is probably the most automated on the planet.

Although Rakuten Mobile does not divulge overall staff numbers, its technology department employs a total of 1,100 people, and only 250 of them "really touch the network," according to CEO Tareq Amin. A traditional operator would have thousands in this operations unit, he said.

Including all its ecommerce activities, overall headcount at Rakuten Group has risen from 17,214 in 2018, the year before it announced its telecom move, to 23,841 in 2020 (it has yet to publish an annual report for 2021).

This compares with the 47,320 that telecom rival KDDI had on its books at the end of its last fiscal year, and the 47,313 at SoftBank Corp (the telecom part of SoftBank).

Meanwhile, the UK's BT, a fixed and mobile operator with few assets outside its domestic market, employed as many as 98,370 people at the end of March.

Table 1: Headcount at major service providers

2017 2018 2019 2020 2021
América Móvil 191,851 189,448 191,523 186,851 181,205
AT&T 280,000 268,220 247,800 230,760 202,600
BCE 51,679 52,790 52,100 50,704 49,781
BT 105,787 106,742 105,344 99,741 98,370
CenturyLink 51,000 45,000 42,500 39,000 36,000
Deutsche Telekom 217,349 215,675 210,533 226,291 216,528
—T-Mobile US 51,000 52,000 53,000 75,000 75,000
KPN 13,275 12,431 11,248 10,102 9,699
Millicom 19,127 21,403 22,375 21,419 20,687
Orange 151,556 150,711 146,768 142,150 139,698
Proximus 13,391 13,385 12,931 11,423 11,532
Rogers Communications 24,500 26,100 25,300 23,500 23,000
Sprint 30,000 28,500 27,000 0 0
Swisscom 20,506 19,845 19,317 19,062 18,905
Telecom Italia 59,429 57,901 55,198 52,347 51,929
Telefónica 122,718 121,853 118,025 113,182 107,776
Telenor 30,800 20,832 20,044 18,000 16,000
Telia 25,021 20,836 21,232 20,741 19,566
Telus 53,600 58,000 65,600 78,100 90,800
VEON 39,938 46,132 46,492 43,639 44,585
Verizon 155,400 144,500 135,000 132,200 118,400
Vodafone 106,135 98,996 95,219 96,506 96,941
(Source: Companies, SEC filings. Notes: End-of-year figures were used unless unavailable, in which case year-average numbers were used; T-Mobile and Sprint merged in April 2020)

Apologists for automation insist humans will be incapable of operating advanced 5G networks that include hundreds of parameters and need configurations to be changed by the millisecond.

Ignoring the casualties so far, a long-running argument is that automation – rather than destroying jobs – will free up staff for other, less brain-numbing activities.

But it is hard to see where they would be needed apart from in software, and a telco that maintains headcount at historical levels while creating more software jobs is a company with higher costs.

That much seems evident from a quick glance at wage figures compiled by the US Bureau of Labor Statistics. Telecom technicians and repairers earn mean annual salaries of up to $62,250, according to that data, while software developers make more than $120,000.

A pivot to software unaccompanied by job cuts elsewhere has troubling implications given how much big operators already spend on staff. At Germany's Deutsche Telekom, for instance, about 27% of total operating costs last year went on labor.

Table 2: Revenues per employee ($)

2017 2018 2019 2020 2021
América Móvil 271,385 279,295 268,057 277,362 240,623
AT&T 573,214 636,791 731,207 744,323 833,485
BCE 350,301 354,531 364,201 359,915 375,656
BT 281,587 276,230 273,286 269,294 266,340
CenturyLink 347,059 501,778 504,894 531,077 546,861
Deutsche Telekom 368,210 375,031 408,552 476,893 536,891
—T-Mobile US 796,157 832,885 849,019 911,960 1,068,240
KPN 523,179 484,693 521,137 557,938 579,028
Millicom 205,782 184,367 193,788 194,734 223,184
Orange 289,761 293,378 307,499 317,729 325,233
Proximus 462,792 459,886 469,836 512,498 516,827
Rogers Communications 467,724 461,265 475,126 472,254 508,145
Sprint 1,080,200 1,178,947 N/A N/A N/A
Swisscom 585,657 605,888 608,581 597,713 608,107
Telecom Italia 355,990 349,514 347,989 322,607 315,142
Telefónica 452,758 426,974 438,170 406,658 389,392
Telenor 427,395 536,510 598,363 679,049 727,012
Telia 324,984 408,692 412,618 438,237 460,137
Telus 197,887 197,559 178,197 156,651 147,888
VEON 237,869 196,957 190,635 182,864 174,678
Verizon 811,030 905,882 976,800 970,439 1,128,488
Vodafone 469,136 471,299 504,672 485,043 502,387
(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)

Inflationary pressure combined with slow or zero sales growth could speed up the pace of automation this year and next. Grumbling about wage demands on AT&T's last earnings call, CEO John Stankey reckoned automation would mitigate the effect.

"The good news is we're doing a lot of investment in other forms of mechanization and automation in our business," he told analysts.

"And some of that investment is helping us keep a lid on some of the wage-related inflation costs."

AT&T cut 28,160 jobs last year, more than any other operator in Light Reading's study, and its headcount has dropped by 78,850 since 2015, leaving it with about 202,600 employees at the end of 2021.

Like Telenor, it has witnessed a dramatic improvement in revenues per employee over this period, up from about $522,000 in 2015 to more than $833,000 last year.

Mind the gap

Yet automation is not a straightforward task for many operators.

"We're not at the stage where we can replace human beings in NOCs [network operations centers] with bots, and I doubt that's our target," said Abdu Mudesir, Deutsche Telekom's chief technology officer, during a conversation with Light Reading at this year's Mobile World Congress. Automation throughout the organization "needs to be wider," he said.

The difficulties for operators like Deutsche Telekom include the need to continue operating older, hard-to-automate technologies and platforms, such as copper, 2G and 3G networks. The decommissioning of those should deliver savings in the next few years.

In the meantime, European operators have attempted to cut costs by sharing infrastructure with rivals. Some, including Deutsche Telekom, have also started buying IT services from public-cloud providers, effectively outsourcing their basic IT estate.

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

If software expertise is paramount, then skills and culture gaps are perhaps the main challenges faced by operators determined to automate.

Not every employee can be retrained to be a software engineer and competition for emerging talent is fierce.

"The top companies to work for wouldn't include a telco," said Darrell Jordan-Smith, the senior vice president of global industries for Red Hat, an IBM software subsidiary, at a recent press event.

"It would be a Google, an Amazon, a Microsoft."

Mirko Voltolini, the vice president of innovation for Colt Technology Services, recognizes that dilemma.

"There is a massive skills gap today and a lack of availability of skills in the market because everybody is after the same skill sets," he said.

BT sounds increasingly desperate. According to a new study it commissioned, higher-education students in the UK are mainly oblivious to opportunities in artificial intelligence, with courses "unnoticed" by nearly three in five of them. Unless that changes, the zero-touch network could be some way off.

Related posts:

— Iain Morris, International Editor, Light Reading

Be the first to post a comment regarding this story.
Sign In