T-Mobile to Lay Off 5,000 Employees

In a significant move to streamline its operations and enhance its strategic focus, T-Mobile has disclosed plans to lay off approximately 5,000 employees, constituting around 7% of its workforce, over the next five weeks. This announcement comes amid a period of economic uncertainty that has seen various technology companies implement mass layoffs in response to evolving market dynamics.

CEO Mike Sievert communicated the decision in a letter to employees on Thursday, detailing that the layoffs will predominantly impact corporate and back-office roles that are deemed “primarily duplicative.” These reductions aim to flatten the company’s middle management structure and bolster efficiency. It’s notable, however, that T-Mobile’s retail and “consumer care” staff, directly involved in customer interactions, will remain unaffected by the layoffs.

Sievert acknowledged the changing landscape of customer expectations, stating, “What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago.” The decision to downsize the workforce aligns with T-Mobile’s efforts to reposition its resources and adapt to shifting market dynamics.

T-Mobile’s move to downsize its workforce comes on the heels of similar actions by various tech giants, including Microsoft and Meta, who have grappled with navigating the challenges posed by the current economic climate.

In the company’s most recent quarterly earnings report, T-Mobile reported a 2.5% year-over-year decline in sales and a modest decrease in net customer additions compared to the same period in the previous year. Despite these figures, the company posted record-low customer churn rates and witnessed growth in profitability. This mixed performance has reflected on T-Mobile’s stock, which has declined over 7% since August of the previous year. Following the announcement of the layoffs, T-Mobile’s shares experienced a slight decline of around 1%.

Mike Sievert underlined the company’s continuous efforts to optimize its operations since the acquisition of Sprint, focusing on streamlining the business and expanding its high-speed internet services. However, he emphasized the need for a more targeted approach to meet evolving customer expectations, stating, “Today’s changes are all about getting us efficiently focused on a finite set of winning strategies.”

Affected employees will be notified of their impending layoffs by the end of September, and T-Mobile anticipates incurring a pre-tax charge of $450 million in the September quarter related to these reductions, as reported in a securities filing on Thursday. The company aims to offer competitive severance packages based on tenure, expedited stock vesting, career transition services, and other benefits to the affected employees. Sievert assured employees that the company does not have plans for further widespread employee reductions in the foreseeable future.