A leaked memo published by the Wall Street Journal reveals an internal struggle to cut the budget, after a previous $1.5 billion cost cut in the past 12 months didn’t balance the books. Chief financial officer Tarek Robbiati announced an external hiring freeze and said job reductions were “inevitable.”
Sprint employed 31,000 people in March this year. It did not disclose how many of those jobs were going to be cut in the latest purge.
The cost cutting measures come at a hard time for Sprint, as it tries new and inventive ways to win customers. The company has also had troubles in the past with customer support, something that may deteriorate if Sprint starts axing support jobs.
Sprint currently has $7.5 billion in operating expenses during the three-month period ending on June 30. It is starting to win back customers, adding 1.2 million customers in the fourth quarter last year, but that is not making the carrier any more profitable. Not spending money on the wireless auction is a smart short-term strategy to keep money, though it may push Sprint’s wireless service even further behind that of Verizon and AT&T.
Sprint was acquired by Japanese telecommunications giant SoftBank in 2012, but the two companies have been largely independent of each other. Sprint even brought in Marcelo Claure to fix some of its issues in the wireless market, instead of looking to its Japanese owners for help.
Claure’s plan of low-cost wireless contracts, coupled with simple pre-paid plans, is winning over some customers, but Sprint isn’t gaining new users as fast as AT&T and T-Mobile. The company fell into fourth place in the U.S. wireless battle earlier this year, and Sprint doesn’t look like it will be returning to third place any time soon.
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