Sprint To Cut Up To $2.5 Billion In Costs, Layoffs Likely
Sprint will move to cut up to $2.5 billion in operating costs over the next six months, according to the Wall Street Journal.
The Journal obtained an email detailing the move from the Overland Park-based telecommunications company's CFO Tarek Robbiati Thursday. So far, the company hasn't announced how they plan to cut the money, but layoffs are likely.
The company already decreased expenses by $1.5 billion over the last year since its new CEO Marcelo Claure took the helm. That included laying off 2,000 employees in November 2014.
Telecommunications analyst James Moorman with D.A. Davidson & Co., says that he expects the company will move to a leasing model for its cell phones to generate more cash.
"It's kind of like leasing a car, you pay a monthly payment, but then the company you're leasing from actually owns the handset," Moorman said. "This financing will allow them to get more cash in advance so they're not financing [phones]."
Sprint officials provided a statement on the looming cuts, saying the company is focused on improving their network to make sure the company is viable in the long-term.
"It is likely that some jobs will be impacted but it's premature to discuss the details as we are in the early stages of the process," the statement says. "Whatever decisions are made, we will inform our employees first and treat any impacted employees with dignity."
Sprint recently announced that it would not participate in a coming Federal Communications Commission auction of valuable low-bandwidth spectrum. The move will likely save them billions, but could mean competitors like T-Mobile, AT&T and Verizon will gain an even bigger hold on the market.
Cody Newill is a general assignment reporter for KCUR. You can reach him on Twitter @CodyNewill or you can send him an email at firstname.lastname@example.org.