T-Mobile Cuts Centered on Corporate and Back-Office Workers

T-Mobile US (NASDAQ: TMUS) said on Thursday it plans to reduce its workforce by about seven percent in the U.S. as part of an effort to rein in costs as the wireless carrier spends heavily to attract new subscribers in an increasingly competitive market, reports Bloomberg.

The move will affect about 5,000 positions, mostly corporate and back-office staff, along with some tech roles, the company said in a regulatory filing. The carrier has been taking the lion’s share of subscribers looking for cheaper plans in the last three quarters by offering discounted service bundles, but that has taken a toll on T-Mobile’s revenue growth, noted Reuters.

T-Mobile US President/CEO Mike Sievert said in a letter to employees that the cost of attracting and retaining customers is “materially more expensive than it was just a few quarters ago.” Building out the carrier’s broadband business and efforts in other areas “is not enough to deliver on these changing customer expectations going forward,” he added. Sievert said some areas of the business will implement more centralized models to improve efficiency and save costs.

The carrier expects to incur a pre-tax charge of about $450 million in the third quarter. T-Mobile said in July that it expects postpaid net customers addition for 2023 between 5.6 million and 5.9 million.

The move signals that T-Mobile is looking to offset a new round of heavy discounts and free phone promotions going into the holiday season, partially fueled by the arrival of Apple’s latest iPhone, according to Bloomberg. Like other U.S. carriers, T-Mobile is grappling with a slowdown in subscriber growth as cable companies Comcast and Charter Communications sign up hundreds of thousands of new customers by offering free mobile lines.

Rival AT&T (NYSE: T) has also been cutting jobs. It has eliminated 74,130 employees, including through divestitures, or more than 30 percent of its staff since the beginning of 2021 through June 30, 2023, according to Bloomberg. The carrier also expanded its cost-cutting target by $2 billion in July to $8 billion over the next three years to adjust to an environment of slower subscriber and phone net adds. AT&T is restructuring operations by reducing more than 300 offices nationwide to nine hubs. The move is expected to displace between six to 15 percent of its staff of 156,630, as of the end of 2Q23.

By Leslie Stimson, Inside Towers Washington Bureau Chief

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