Tags: sprint | layoffs | jobs | profit

Sprint Aims to Slash Costs Up to $2.5 Billion With Layoffs

Sprint Aims to Slash Costs Up to $2.5 Billion With Layoffs
(AP)

Tuesday, 03 November 2015 09:46 AM

Sprint Corp., the fourth-largest U.S. wireless carrier, said it aims to slash fiscal 2016 expenses by as much as $2.5 billion, through layoffs and a wide array of cost controls, as an essential part of its ongoing turnaround efforts.

The struggling carrier has been cutting costs at a time when it is also investing heavily in network upgrades.

"We are leaving no stone unturned and looking at all areas," company spokesman Dave Tovar said in an interview.

He declined to predict how many employees would be laid off, saying it was too early in the budgeting process.

The estimated cost savings for Sprint, which has 31,000 employees, would be equivalent to about 10 percent of its current annual operating costs of $26 billion.

The ratio of the company's capital expenditures to its sales is more than 20 percent, which Tovar said is higher than for other wireless carriers. "We are trying to get more in line with the industry average," he said.

Savings are also expected to come from cutting severance for laid off employees and temporarily eliminating raises.

Sprint has been burning through cash because of monthly leasing plans requiring wireless carriers to pay vendors for devices up front.

Sprint on Tuesday reported quarterly revenue well below estimates as more customers shift to monthly leasing plans from traditional two-year contracts.

The company, in the middle of a turnaround plan, also said it expected fiscal 2015 adjusted EBITDA at the lower end of its previously forecast range of $7.2 billion-$7.6 billion.

Sprint's shares were down 9 percent at $4.41 in premarket trading on Tuesday.

The shift to monthly leasing plans has resulted in increased cash burn as Sprint needs to pay upfront for mobile devices but gets paid only monthly by subscribers.

Sprint has said it has been working with majority owner SoftBank to set up a company that will fund its upfront device payments to help support its leasing plans.

The leasing program with SoftBank and other cost cutting measures will "sufficiently meet the company's cash needs for the foreseeable future," Sprint said in a statement.

The company is locked in a price war with rivals Verizon Communications Inc., AT&T Inc. and T-Mobile US Inc., which are going after each others' subscribers with promotions that have hit profits in the industry.

Sprint said net operating revenue fell 6 percent to $7.98 billion in the second quarter ended Sept. 30. Analysts on average had expected revenue of $8.14 billion, according to Thomson Reuters I/B/E/S.

Sprint said it added a net 1.1 million customers in the quarter.

The company's net loss narrowed to $585 million, or 15 cents per share, in the second quarter ended Sept. 30, from $765 million, or 19 cents per share, a year earlier.

© 2019 Thomson/Reuters. All rights reserved.

   
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Sprint Corp., the fourth-largest U.S. wireless carrier,said it aims to slash fiscal 2016 expenses by as much as $2.5 billion, through layoffs and a wide array of cost controls, as an essential part of its ongoing turnaround efforts.
sprint, layoffs, jobs, profit
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2015-46-03
Tuesday, 03 November 2015 09:46 AM
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