Sprint to slash $2.5 bn through job cuts: Reports
05 Oct 2015
The fourth-largest wireless network operator in the US, Sprint Corp, plans to cut costs by $2-$2.5 billion by implementing job cuts, Bloomberg reported.
On execution this will be the second such plan to be realised in the last 12 months. In November 2014, Sprint had announced a $1.5-billion cost-cutting plan by slashing 6.5 per cent of its workforce.
Sprint counted a workforce of over 31,000 as of March 2015.
Sprint is severely cash strapped with a debt-laden balance sheet and negative operating cash flow. It had been witnessing losses annually since 2007 even as its level declined by a massive $2.2 billion in the last reported quarter which ended on 30 June, 2015.
Sprints' credit rating was downgraded from B1 to B3 by credit rating agency Moody's Investor Service. Moody's cited excessive pressure due to intensifying competition and high credit risk. The company's net debt stood at over $28 billion at last quarter-end.
Further, the company's liquidity was expected to take a severe beating after its announcement of an iPhone leasing plan of $1 per month.
Meanwhile, The Wall Street Journal reported citing an internal memo that the wireless carrier had frozen external hiring and all expenditures required the approval of the finance department.
"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," Sprint spokesman Dave Tovar told Reuters in an email.
The company had been under much pressure to cut costs due to concerns that it was spending too much for acquiring and retaining customers.
According to Tovar, it was likely that some jobs would be impacted but it was "premature" to discuss the details as the process was in the early stages of the process.
In the race for subscribers, Sprint, which boasts 57.7 million customers at the end of the first quarter, was down to fourth place among US wireless carriers, falling behind rival T-Mobile US Inc.
Last month Sprint said it would not participate in an auction of wireless airwaves, a decision that would save the carrier billions of dollars but could deprive its network of upgrades in the future. (See: Sprint not to participate in auction of wireless airwaves).
