Sprint Cuts Workforce Costs to Battle Cellular Rivals

Sprint said the employee firings will save about $160 million in costs in the second fiscal quarter of 2014 and will be completed by Oct. 31.

Sprint layoffs

Sprint is laying off an undisclosed number of employees by Oct. 31 as part of a plan to save $160 million in costs so the company can "become more competitive in the marketplace."

The firings were outlined in a Form 8-K report filing with the U.S. Securities and Exchange Commission that was released on Oct. 3.

"On September 30, 2014, Sprint Corporation began implementation of a workforce reduction plan to reduce costs and help become more competitive in the marketplace," the filing explained. "The plan is expected to include steps to, among other things, improve operational efficiencies and reduce costs, as a result of which the company expects to incur material charges under generally accepted accounting principles. This planned reduction is expected to be largely completed by Oct. 31, 2014, and will include certain management and non-management positions."

The layoffs might not be over with this round of firings, the company said in the filing. "The company expects to recognize a charge of approximately $160 million in the second fiscal quarter of 2014 for severance and related costs; however, additional material charges associated with future labor reductions may occur in future periods," according to the filing. "This estimated charge for the severance and related costs was determined based on an existing employee benefit severance plan and based on the information available as of the date of this Form 8-K."

In response to an Oct. 6 email inquiry from eWEEK, a Sprint spokeswoman declined to comment on how many employees will lose their jobs in this round of layoffs. "We're still working through the details, so exact numbers are not available at this time," she said.

The upcoming layoffs have been in the works since August, when directors within the company's network and technology organizations were told of the staffing cuts that were being eyed, the spokeswoman said. Sprint managers were notified on Oct. 3 of the pending cuts, she explained. "All other employees in these organizations as well as in IT and portfolio management whose jobs are being eliminated will be personally informed by their manager on or before Oct. 17, and most employees whose jobs are being eliminated will have a last day worked on Oct.31."

The layoffs are being carried out to reposition Sprint in its ongoing competition with rivals in the marketplace, including Verizon Wireless, AT&T and T-Mobile, according to the company. "Sprint is focused on becoming a more competitive player in the marketplace. This includes offering competitive pricing plans and getting our cost structure more in line with that of our competitors. As part of this effort, organizations across Sprint are examining their cost structures and operations to identify opportunities for increased efficiency and streamlined approaches to meet our customers' needs. The decision to reduce our workforce is never an easy one, but this, in conjunction with other cost-cutting measures, is necessary to help Sprint lower our costs."

Affected workers are eligible for a minimum of eight weeks' pay and benefits under Sprint's separation plans, including additional separation pay based on length of service and outplacement benefits to assist them in finding their next position, according to the company.

Sprint and its key rivals have all been recently bolstering its efforts to battle each other in the fight for customers.

Sprint and Verizon Wireless recently matched or exceeded free mobile data offers for customers after AT&T began a recent promotion to double some cellular data packages at the same prices for users.

In late September, AT&T launched its double data offer for customers who buy shareable data packages for 15GB to 50GB per month, giving users 30GB to 100GB of shareable data for the same prices.

Sprint recently hiked its own shareable data packages for users who buy monthly shared plans for 32GB, 40GB or 60GB of data, offering users free increases to 60GB, 80GB or 120GB, respectively, according to a recent eWEEK story.

Verizon also joined the battle, doubling the included shareable data for business customers who buy monthly packages of between 20GB and 50GB, which will provide 40GB to 100GB of data to users.

Meanwhile, Sprint has fallen into fourth place, below rival T-Mobile, in performance rankings among the big four cellular carriers in the United States, according to the results of new tests performed by RootMetrics, an independent mobile analytics firm. Still in the number-one and number-two spots in the rankings are Verizon Wireless and AT&T.