Struggling carrier announced plan to cut some $2.5 billion; doing away with trash cans in bid to go paperless
As Sprint works to reduce expenses to the tune of $2.5 billion, the fourth-ranked U.S. carrier told employees it’s going to adjust the severance packages offered to workers impacted by the cuts, according to the Kansas City Star.
Sprint formerly offered two weeks severance of full pay for each year of employment; that is apparently getting cut back to one week of pay for each year worked, a 50% reduction of benefits.
The carrier is cutting a $1,000 “additional separation lump sum payment,” according to a letter from Sandy Price, SVP of human resources. The changes will impact employees who are notified of a change in job status after Jan. 30. Sprint announced the cost cutting plans in an internal memo distributed earlier this month.
Sprint CFO Tarek Robbiati in the memo said such extensive cost-cutting measures “inevitably will result in job reductions. The main thing to consider when requesting to spend money is to take an owner’s mindset by treating every dollar as if it were your own.”
Sprint CEO Marcelo Claure hinted at the move in comments made last month at the Goldman Sachs-hosted Communicopia event. Claure’s comments addressed cost cutting, network improvement and gaining market share.
Claure said Sprint has already cut $1.5 billion in costs under his tenure and, looking forward, “We’re committed to basically doing the same or more. We definitely have to take cost out.”
Wells Fargo Securities senior analyst Jennifer Fritzsche said the announcement “is not overly surprising given the company’s weaker margins [vs.] the peers, the amount of the cut is a significant amount. To put it in perspective, $2.5 [billion] represents [one-third] of the company’s operating costs. As we have written in the past, Sprint is very much a ‘show me’ story. While we view this as a positive step in the right direction, we believe the market will give it very little credit for such a move until we see tangible evidence of costs coming out of the model. There are opportunities on the roaming and special access side that we believe could see some movement in 2016.”
“As Marcelo, Tarek and other leaders have shared, we are undergoing a transformation to radically change the way we do business,” the Sprint memo noted. “This effort addresses every aspect of our business to enable us to compete more effectively, serve our customers better, and grow revenue profitably. We must also reduce costs across the business.”
“I don’t want to tell you how much we spend on paper around here, but it is significant,” Claure said. “And requiring everybody, including all of the executives — even ME — to manage their own trash will be another reminder that the old ways of operating must change.”
