How and why T-Mobile is cutting 5,000 jobs

T-Mobile disclosed it will cut around 5,000 positions – 7% of its workforce – in a move designed to reduce costs, simplify its management structure and improve profits.

“While we believe some could read this as a negative for T-Mobile, as it may imply something may be going wrong, we do not believe that to be true,” wrote the financial analysts at KeyBanc Capital Markets in a note to investors following T-Mobile’s filing. They argued the move would help T-Mobile further improve its earnings and free cash flow. “Given the [job] reduction primarily impacts back office positions, we would expect [new customer] volumes to not be negatively impacted, and we believe volumes can accelerate going forward. We believe this will continue the growth trajectory while improving operating efficiencies that are already benefiting from [merger] synergies.”

T-Mobile isn’t the only company in the wireless sector cutting jobs. AT&T, Verizon, Crown Castle, Ericsson, Airspan, Cambium Networks, Cisco Systems and Dish Network are among those cutting back. Moreover, both AT&T and Verizon have recently embarked on new cost-cutting programs.

T-Mobile’s layoffs also come roughly three years after the close of the company’s merger with Sprint. Company officials at the time of the merger promised the two companies would employ more workers combined than as separate companies. But, as noted by Geekwire, company officials later clarified that was not a promise to employ more people overall but a promise to employ “more people than the combined total of their separate workforces in a future scenario in which they didn’t merge.”

Indeed, as Light Reading has reported, T-Mobile has been steadily reducing the number of its employees since it merged with Sprint in 2020. For example, earlier this year T-Mobile laid off an unspecified number of employees as it worked to overhaul its retail sales strategy.

The letter

T-Mobile CEO Mike Sievert argued the new job cuts would better position T-Mobile for the future.

“What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago,” he wrote in a letter to T-Mobile employees. “We’ve been out-running this trend by accelerating merger synergies, and building our high-speed Internet business faster than expected, and out-performing in a few other areas. However, 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.”

Continued Sievert: “Today’s changes are all about getting us efficiently focused on a finite set of winning strategies, so that we can continue to out-pace our competitors and have the financial capability to deliver a differentiated network and customer experience to a continually growing customer base, while simultaneously meeting our obligations to our shareholders.”

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