T-Mobile is laying off close to 5,000 employees, mostly in corporate roles, as it looks to streamline its operating model and structure.
In a memo to employees sent Thursday, T-Mobile CEO Mike Sievert said 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 also cited increasing customer acquisition and retention costs. He described the layoffs as a “large change, and an unusual one for our company.”
“What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago. 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,” he wrote. “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.”
The layoffs primarily impact corporate and back-office roles, and some tech positions. Retail and consumer care jobs are not affected.
T-Mobile stock was down 1% on Thursday.
Bellevue, Wash.-based T-Mobile reported $19.2 billion in revenue for the second quarter, down 2.2% year-over-year. It beat analyst expectations for customer additions and churn.
In the company’s earnings release, Sievert touted “our best Q2 postpaid phone net adds in eight years, the lowest postpaid phone churn in the industry for the first-time ever, and industry-leading financial growth.” T-Mobile raised its subscriber growth guidance for 2023.
The company also announced it bought back $3.5 billion in common stock in the quarter.
T-Mobile’s latest annual regulatory filing shows that the company employed 71,000 people as of the end of 2022. That’s about 9,000 fewer than the approximately 80,000 people Sprint and T-Mobile employed when they merged in early 2020 — despite promises to create more jobs out of the merger.
T-Mobile expects to take a $450 million pre-tax charge in the current quarter related to the layoffs.
Sievert said the company plans to inform all affected employees by the end of September.
“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,” he wrote.
Read his memo below.
I am reaching out today to share some important news that I wanted to be sure you heard directly from me. Starting this week, and over the next five weeks, we will be making changes to our organization that will result in the reduction of some positions at the company. These shifts will impact close to 5,000 positions, a little under 7% of our total employees in locations across the country, primarily in corporate and back-office, and some technology roles. The retail and consumer care experts who take care of our customers will not be impacted. After this process is complete, I do not envision any additional widespread company reductions again in the foreseeable future.
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. Some areas of the business will be implementing more centralized models where they can improve efficiency and effectiveness and save costs. We’re also 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.
I know this email will create uncertainty, but I believe transparency about what is happening, and how we’re taking care of our impacted colleagues, is important. I also want to take this opportunity to explain a bit more about why we are making these shifts and share why I am optimistic about what’s to come.
We’ve been able to celebrate tremendous successes together over the past decade, and right now, our company is at a pivotal crossroads. As the Un-carrier, we don’t hesitate when customer demands change – we step up and meet those demands, every time. That’s how we became successful. And today, thanks in part to the added competition we brought due to our merger and historic network build, those customer demands are higher than ever.
What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago. 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.
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.
In a company as successful as ours, the time to challenge the status quo and write the next chapter, is WHILE we are still successful. That’s how we sustain it. Instead of just taking the model that we know and trying to run faster, we can take it to the next level. We know the work ahead of us will look different than the work behind us, and that means how we do the work needs to change, too. We need to move at the speed of technology, using data, AI and other tools, to deliver simplified digital experiences specifically curated for every customer.
In addition, I want this to be a better place to work for every employee going forward. 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.
It is hard to part ways with our coworkers who will be impacted, and I want to let you know that our focus during this time of change is to do everything we can to treat each of them with as much care and support as possible. Our plan is to have all notifications complete by the end of September. This is a bit of a longer timeframe because we want to ensure we treat every one of our people with respect and personal support. We have zero intention of being a faceless – or heartless – company in a situation that is already difficult.
We will also provide competitive severance payments based on tenure, plus an additional 60 days minimum of transition leave, which includes pay and benefits, plus accelerated vesting of their next stock vest, continuation of tuition reimbursement benefits, career transition services, and a new T-Mobile alumni service discount good for life. Importantly, employees leaving us in good standing will have privileged access to T-Mobile hiring and recruiting for appropriate roles now and in the future, as we continue to build our organization in other areas.
This is a large change, and an unusual one for our company. We’re tackling the tough decisions now, because I wanted to make sure that people working here are not wondering what’s next, after this process concludes. As I mentioned at the top, because of this, we do not envision making additional large- scale reductions across the company again in the foreseeable future.
This is a company and team that looks around corners, that anticipates change and stays ahead of it. This is how we’ve become successful. We’ve always been willing to embrace rapid change in this industry, put customers first, and challenge the status quo where needed to make sure every customer has the best experience we can deliver, while also meeting our commitments to shareholders. Today’s changes, while difficult, are being pursued so that we can continue that tradition and put the company on a stronger footing for years to come.
—Mike
