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Sprint to Cut Up to $2.5B in 6 Months

Sarah Thomas
10/2/2015
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Sprint is planning to cut up to $2.5 billion in costs over the next six months, including more layoffs. This builds on the $1.5 billion in expenses it said it would cut in the last fiscal year.

Sprint Corp. (NYSE: S)'s new CFO Tarek Robbiati revealed the cost-cutting plans in a memo obtained by The Wall Street Journal. The memo said the company needed to cut between $2 billion and $2.5 billion over the next six months, inevitably including some job cuts, as well as put a freeze on external hiring and introduce a mandate for the finance department to review and approve all expenditures.

Sprint had $7.5 billion in operating expenses in the most recent quarter, so $2.5 billion will make a major dent. (See Sprint's New Boss Plans Cost Cuts.)

Sprint provided Light Reading with a lengthy statement, confirming it has begun cost cutting, but not sharing any details on the layoffs. It reads:

    Recently we communicated with Sprint employees to update them on the progress we are making to transform our business. We discussed the improvements we have made to many of our key metrics including net adds, churn, and our network. We are laser focused on creating a superior network, being the price leader and providing an amazing customer experience. We are pleased that our business has momentum and we are heading in the right direction.

    We also shared with our top leaders that in order to be successful, we must change our cost structure so we can fuel our growth and operate more efficiently. We have begun an effort to significantly take costs out of the business so the transformation of the company will be sustainable for the long-term. It is likely that some jobs will be impacted but it’s 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. 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.


For more on Sprint's progress in the US, visit the dedicated mobile content section here on Light Reading.


The announcement about cuts comes shortly after Sprint said it would sit out the 2016 600MHz spectrum auction. The carrier said it wouldn't participate because it has enough spectrum on hand, but it's also likely an expense it cannot afford right now. Sprint CEO Marcelo Claure said in August that it would be able to densify its LTE network while actually lowering capex in 2016. (See Sprint Says It Will Sit Out Incentive Auction , Sprint Promises Better LTE on Lower Capex and Sprint Spend Slowing Ahead of Next Network Push – Analysts.)

This will not be the first round of layoffs for Sprint. In addition to swapping out most of its management team, the carrier has gone through several rounds of layoffs in the past year. (See More Executive Shake-Ups at Sprint , Sprint to Cut 2,000 More Jobs, Sprint Starts Layoffs, Will Take $160M Charge and Sprint Cuts 452 Jobs at Kansas HQ.)

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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DHagar
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DHagar,
User Rank: Light Sabre
10/20/2015 | 2:33:13 PM
Re: But not in Chicago
Ariella, not pessimistic at all, maybe astute?  That is my point, such a bold move is not necessarily an indication of progress, unless they are strategically repositioning.  It can be a sign of death by a 1000 cuts.
Ariella
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Ariella,
User Rank: Light Sabre
10/20/2015 | 2:06:53 PM
Re: But not in Chicago
@Dhagar call me pessimistic, but I think it's more of the latter.
DHagar
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DHagar,
User Rank: Light Sabre
10/19/2015 | 12:32:08 PM
Re: But not in Chicago
Phil_Britt, good points!  So that is the key as to whether this is a plus or minus.  If Sprint has a strategy and can position itself in the market and target those resources, then this is a good thing.  But if they are just looking to cut costs because of their current services, structure, etc., this is just another indication of a weakening market position.
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
10/19/2015 | 10:44:03 AM
Re: But not in Chicago
It's not unusual for companies to cut staff in some areas and to add in others, particularly if there are differnet business needs or if the more successful divisions of a company are in one region, and less profitable are in another. However, companies typically don't right-size at first, either needing more cuts in the future, or cutting too many to cut costs so their is no longer the support needed in various areas to provide customers with the expected service.
MikeP688
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MikeP688,
User Rank: Light Sabre
10/5/2015 | 3:27:48 AM
Re: But not in Chicago?
When I first reviewed the reports, my eyes nearly popped out.  But the reality of a mature market has caught up with Sprint and whether the growth path is there is a challenge--Maybe, as I suggested at one time, FreedomPop may take Sprint out of its' misery.   If someone thinks I'm joking, I really am not becuase I think FreedomPop is actually changing and transforming the paradigm.

 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
10/4/2015 | 2:01:16 PM
Re: But not in Chicago?
This company is going through a ton of changes. I remember back when the Sprint Nextel deal went through, I thought nothing could stop this company. 

Since that time, wireless has been nothing but an arms race. And Sprint wasn't exactly on top of the smartphone revolution. Will the company figure it all out? I think so, it's just going to require some painful cuts. 
nasimson
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nasimson,
User Rank: Light Sabre
10/2/2015 | 8:11:37 PM
Re: But not in Chicago?
With Sprint having done this multiple times earlier and still finding the need to do it, I doubt that it is going to work this time.
DHagar
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DHagar,
User Rank: Light Sabre
10/2/2015 | 7:26:17 PM
Re: But not in Chicago
Sarah, well that goes to my questions, are they strategically refocusing their workforce around a viable market or are they just cutting costs?  I am also wondering are they cutting so deep that they won't have the capacity to gear up in their selected markets and make a good run?

Do they have a strong market lead in any of the developing markets currently?  If not, they may be in trouble?
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
10/2/2015 | 1:05:02 PM
But not in Chicago?
Sprint just recently said it would add 1,000 jobs in Chicago this year, increasing the number from its original job addition target. So how does that work with a hiring freeze and more layoffs coming?
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