January 17, 2014

Sprint plans companywide layoffs during the first half of 2014

As part of the job cuts, Sprint plans to close some of its less profitable retail stores, which could affect 300 to 500 employees. Additional job cuts would come in Sprint’s customer care centers, business sales and other areas.

Sprint Corp. plans to lay off employees across the country during the first half of the year but is still determining the extent of the cutback, officials said Friday.

“The reductions are a result of improved operational efficiencies and in response to changing market conditions,” Sprint spokeswoman Melinda Tiemeyer said in a statement.

As part of the job cutbacks, Sprint plans to close some of its less-profitable retail stores. Bill White, also in the company’s communications department, said in an interview that the closings could affect 300 to 500 employees.

Additional job cuts would come in Sprint’s customer care centers, business sales and other areas, though the number of those layoffs has not been determined.

“We wanted to tell our employees this is coming,” White said, and workers were notified Friday of the plans.

The layoffs will affect management and non-management employees, Sprint said. The company now employs 38,000, including about 7,000 in the Kansas City area.

White said total employment is down from about 40,000 a bit more than a year ago. He said those cutbacks, like those planned now, reflect Sprint’s push to operate more efficiently.

Tokyo-based SoftBank Corp. acquired control of Sprint in a $21.6 billion transaction last summer. It provided billions of dollars of funding and has worked with Sprint to improve its operations.

Sprint said the job cuts were not related to SoftBank’s acquisition but the drive to be more efficient.

For example, White said, many customers have used smartphones long enough that they don’t have as many questions to pose to customer care representatives. Simpler pricing plans also have reduced customer calls, he said.

Services to businesses that use Sprint also have improved, reducing the need for employees to work with them.

Sprint said all employees laid off would be eligible for benefits under a company separation plan.

Analyst Donna Jaegers with D. A. Davidson & Co. said she was unaware of similar job cutbacks driven by efficiencies at other wireless carriers. As a consumer, she also reported that Sprint just increased her bill for the Internet service she buys from Clearwire, which Sprint acquired last summer.

“Sprint’s taking several measures to improve its profitability,” Jaegers said.

In its most recent financial report, Sprint showed a profit of $383 million in the third quarter of last year. It was the company’s first quarterly profit since 2007.

The company has not had a major layoff in several years. Those came when a mismanaged merger with Nextel Communications compromised customer service and created an exodus of customers.

For example, Sprint cut 4,000 jobs in 2008 after starting 2007 by cutting 5,000 jobs.

Since then, the Overland Park-based company has been reporting much smaller cutbacks.

In November, Sprint laid off about 115 of its 3,000-member business-sales staff. Services provided by the business sales group include technical assistance, support and strategies for business clients.

Last August, the company said it was cutting about 800 customer service jobs after shutting down its aged Nextel network at the end of June.

Shutting down the Nextel network also left Sprint with fewer customers, though Friday’s announcement did not tie the coming layoffs to customer losses.

In its most recent quarterly report, Sprint said it had lost 313,000 subscribers during July, August and September. It lost 2 million during April, May and June largely from the Nextel closing and an effort to certify customers who receive subsidized service under a federal program.

Sprint had 54.9 million subscribers at the end of September, the most recently reported total.

News of the pending layoffs came after the stock market had closed. Sprint shares fell 6 cents to finish at at $8.97.

Earlier in the trading day, shares had climbed after an unconfirmed report that the company had received proposals from at least two banks on how it could finance a takeover of T-Mobile US Inc.

The Wall Street Journal, citing unnamed sources, said the bank financing envisions about $51 billion for the deal. That would involve paying about $31 billion for T-Mobile stock and providing possible financing of about $20 billion to cover T-Mobile’s debt as some bondholders would cash in once the company changes ownership.

Tiemeyer declined to comment on the Journal report.

The two companies have been the subject of merger rumors for several years, with nothing happening publicly, but the speculation has mounted again recently.

The Journal story said there is no timetable for making a bid, but both sides were eager to reach a decision by mid-2015, which is around the time of a major government auction of wireless airwaves. It could take 12 to 18 months to win regulatory approval for a deal, the story said.

T-Mobile is owned principally by Deutsche Telekom AG.

In another report Friday, Deutsche Telekom shifted its 67 percent ownership in T-Mobile to a Dutch subsidiary from a German one, said analyst Jennifer Fritzsche with Wells Fargo Securities.

She noted that the move has tax benefits but could have more meaning given the report of Sprint’s financing activity.

“Either way, based on this move by DT (Deutsche Telekom) and headlines we are seeing this morning, there seems to be a lot of smoke to a likely coming fire,” she said in a note to clients.

Some Analysts have raised doubts about a Sprint combination with T-Mobile gaining regulatory approval in Washington. Fritzsche said she doubted Sprint would make a move if the “calculated risk” of rejection exceeded 50 percent.

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