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Sprint to Take $2B Shave

Dan Jones
11/4/2015

Sprint employees now know for sure that more cuts are coming: The question is, when, how many, and where from?

Sprint Corp. (NYSE: S)'s CEO, Marcelo Claure, and its new CFO, Tarek Robbiati, were both questioned heavily about the operator's plans to shave more than $2 billion from its operating expenses in its fiscal year 2016, on the company's earnings call Tuesday. The operator's fiscal year 2016 will end in May 2017.

Both men said on Sprint's second-quarter fiscal year 2015 call Tuesday that all areas of the business are being examined for where economies can be made. "No stone will be left unturned," Claure declared on the call.

This will mean looking at overall labor costs, ways of streamlining the back office and customer care, weeding out bad external network contract deals, and more.

CFO Robbiati intimated on the call that the $2 billion-plus cost cutting may not be such a tall order. "That only represents 10% of the cost base we currently have," he said.

The executives said that getting costs under control is the second stage of righting the good ship Sprint now that they feel that the top line is under control.

Sprint reported $8 billion in revenue for its fiscal quarter 2015, down 6%, with an operating loss of $585 million. The company did manage to add 1.1 million wireless customers for the quarter.

Capex spending on its network is flat year-on-year. Claure, however, made it clear that unlocking as much capacity and speed from the network as possible is crucial for Sprint. The operator has now launched carrier aggregation -- bonding radio channels for more speed and capacity -- in 80 markets.


For more on LTE, visit the 4G LTE content section here on Light Reading.


The CEO says that download speeds of up to 120 Mbit/s have been recorded on iPhone 6s in cities with the carrier aggregation enabled.

— Dan Jones, Mobile Editor, Light Reading

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mhhf1ve
mhhf1ve
11/5/2015 | 8:10:29 PM
How about getting rid of all their Radio Shack locations...?
I think Sprint has many of the same challenges as T-mobile... but with no clear direction to try to tackle them. So... cost cutting is going to be rough for Sprint.

I'd like to see Sprint become more nimble and aggressive -- just like T-Mobile. Sprint needs to make their customer service support so good that you don't really need to go into a physical store. Start carrying some Xiaomi phones? Get some exclusive deals on phones that people will actually want.... Make bill paying simple and easy to understand.... 
DanJones
DanJones
11/5/2015 | 1:17:45 PM
Re: Stones...
Good point!

 

As to the network issues, someone high up at T-Mobile once told me that the reason that T-Mobile so quickly matched and surpassed Sprint with 4G was that T-Mobile kept its own in-house teams to deploy the network, Sprint uses independent contractors. They're always the worse option, he claimed
KBode
KBode
11/5/2015 | 8:31:28 AM
Re: Stones...
Yes I know a lot of professors and adjuncts, all of whom face endless belt tightening measures (bring your own water, take out your own garbage) while the schools spend millions on a seemingly endless stream of higher-tier administrators pulling it ten times what teachers are paid. Certainly not a phenomenon exclusive to Sprint, but yes what Claure's up to reminds my of many colleges in the States right now.
Ariella
Ariella
11/5/2015 | 8:27:57 AM
Re: Stones...
@Kbode That's fairly typical of corporations and other organizations. When I worked at a private college, the head decided that the way to bridge the budget gap was to clamp down on the writing center tutors who were earning $8 an hour. Sure, that could add up to hundreds, maybe even a couple of thousand dollars for the whole year! The head got close to a million, but it's the people on the bottom of the totem pole who get squeezed. 
DHagar
DHagar
11/4/2015 | 9:38:11 PM
Re: Stones
KBode, very insightful!  I would imagine you are correct.

I am also wondering if management has a viable business model/strategy beyond cutting costs.  Once they get their ship "righted". will it float?
KBode
KBode
11/4/2015 | 4:24:37 PM
Stones...
"No stone will be left unturned," Claure declared on the call.

 

Except executive compensation, I'm sure. I think for years Hesse was among the highest paid CEOs in telecom despite never having much to show for it. Is Claure taking a pay cut?

Will be curious meanwhile to see how they intend to match T-Mobile promotions and build out the network while trimming costs left and right (including, apparently, cutting back on snacks and making employees "manage their own trash").

 

Seems like the promised Sprint network of tomorrow is always "just around the corner." Has been that way for ten years now.
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