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.
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, , Editorial Operations Director, Light Reading