T-Mobile moves to cut workforce by 7%, impacting nearly 5,000 positions

Shares of T-Mobile (TMUS) moved lower on Thursday after the company announced that it will cull its workforce by “just under 7%.” Peers AT&T (T) and Verizon (VZ) moved higher following the news.

WORKFORCE REDUCTION: In a regulatory filing on Thursday, T-Mobile announced that it will reduce its workforce by “just under 7%” and incur a pre-tax charge of about $450M in the third quarter related to the workforce reduction.

In an email to employees, Mike Sievert, T-Mobile’s President and Chief Executive Officer, clarified that the workforce reductions would impact nearly 5,000 positions in locations across the country, primarily in corporate and back-office, as well as some technology roles. Impacted roles are primarily duplicative to other roles, or may be aligned to systems or processes that are changing, or may not fit with our current company priorities, Sievert wrote, adding that retail and consumer care experts will not be impacted. Sievert also wrote that he does not anticipate any additional widespread company reductions for the “foreseeable future.”

Sievert told employees that “We’re taking opportunities to build bigger, broader people manager roles with deeper spans and fewer layers, to provide longer-term growth opportunities. At the same time, we’ll also be decreasing our reliance and spend on external workers and resources” and that “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.” He added that “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.”

Sievert continued the email by saying “We can be smarter, faster, and even better at competing, by streamlining our operating model and structure to reduce the complexity. You have my commitment that our organization will create more individual empowerment and faster decision-making over time. This is about re-prioritizing our work and doing it differently, NOT about foisting more work on fewer people. And, it is about optimizing every dollar, so it can be used to deliver a better network, a better value, and a better experience for our customers.”

The CEO said T-Mobile plans to have all layoff notifications complete by the end of September “to ensure we treat every one of our people with respect and personal support.” The company plans to provide “competitive” severance payments based on tenure, as well as an additional 60 days minimum of transition leave.

GUIDANCE REITERATED: In conjunction with its workforce reduction announcement, T-Mobile reiterated the fiscal year 2023 guidance it previously issued. On July 27, T-Mobile previously raised its FY23 core adjusted EBITDA view to $28.9B-$29.2B from $28.8B-$29.2B and said adjusted Free Cash Flow, including payments for merger-related costs, is expected to be between $13.2B-$13.6B.

SENTIMENT: Click here to check out T-Mobile’s recent Media Buzz Sentiment as measured by TipRanks.

PRICE ACTION: In early trading, shares of T-Mobile are down 0.2% to $136.18. Verizon is currently up 0.6% to $33.39, while AT&T is up 0.4% to $14.22.