T-Mobile has announced plans to lay off approximately 5,000 employees, which accounts for roughly 7% of its total workforce, within the next five weeks. The move aims to streamline the company’s operations, primarily targeting corporate and back-office positions that are considered redundant.
In a letter to employees issued on Thursday, T-Mobile CEO Mike Sievert explained that the job reductions would focus on roles that are “primarily duplicative” of others and would also involve trimming middle management layers. However, Sievert assured that employees in retail and “consumer care” positions, which directly engage with customers, would not be affected by these cuts.
Sievert emphasized that the evolving landscape in the telecommunications industry has made customer acquisition and retention more costly. He stated, “What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago.”
T-Mobile’s decision to reduce its workforce follows a trend of mass layoffs in the technology sector, with companies like Microsoft and Meta also implementing cutbacks due to the uncertain economic environment.
In its most recent quarterly earnings report last month, T-Mobile reported a 2.5% decline in sales year-over-year, and net customer additions slightly decreased compared to the previous year. However, the company did achieve record-low customer churn and saw profit growth. T-Mobile’s stock has declined by more than 7% since last August, and its shares were trading down approximately 1% following the announcement of the layoffs.
In his letter, Sievert highlighted that since T-Mobile’s acquisition of rival carrier Sprint three years ago, the company has been working to streamline its operations and expedite the expansion of its high-speed internet business. He stressed the importance of narrowing the company’s focus to meet evolving customer expectations.
Sievert said, “It is clear that doing everything we are doing and just doing it faster is not enough to deliver on these changing customer expectations going forward. Today’s changes are all about getting us efficiently focused on a finite set of winning strategies.”
T-Mobile intends to notify affected employees of their layoffs by the end of September. The company anticipates a pre-tax charge of $450 million in the September quarter related to these reductions, as indicated in a securities filing on Thursday.
To mitigate the impact on affected employees, T-Mobile plans to offer “competitive severance packages” based on tenure, accelerated stock vesting, access to career transition services, and other benefits. Sievert also reassured employees that the company is not currently planning any additional widespread workforce reductions in the foreseeable future.