T-Mobile USA Chief Executive Philipp Humm warned employees a few months ago that more layoffs would happen by the end of May. It’s happening right on schedule.
Today, the company is informing employees of “a series of organizational changes,” a spokeswoman said.
A net loss of about 900 jobs will result. But even more jobs are likely affected by the changes, which include layoffs and shifts to outsource more work.
(Update: The day after the layoff announcement, the company said hiring planned through the rest of the year will offset some of the cuts.)
These layoffs are a major blow to the largest remaining wireless company in the Seattle area after a series of mergers over the last two decades.
The industry took off after McCaw Cellular established the first national cell network in the 1980s. It was sold to AT&T in 1994, and the cluster spawned other carriers that became T-Mobile.
Even if the layoffs restore T-Mobile’s footing, its future remains unclear, especially given the likelihood of further consolidation in the wireless industry.
T-Mobile’s parent company, Deutsche Telekom, is looking at combining T-Mobile with MetroPCS or perhaps spinning it off as a public company, according to a Bloomberg report last week. T-Mobile is the nation’s fourth-largest carrier and MetroPCS is the fifth.
Reducing costs through layoffs and outsourcing could better position T-Mobile for another merger attempt or improve its balance sheet for presentation to potential investors.
Industry consultant Chetan Sharma expects industry shuffling in the next 18 to 24 months as the carriers adjust to slowing growth of pre-paid subscriptions in a saturated market and challenged economy.
“My theory is the market is desperately asking for consolidation,” he said.
If T-Mobile is able to cut its costs and keep its network upgrades on track, “they still have a fairly good shot at being competitive,” said Issaquah-based Sharma, who is not consulting for T-Mobile.
It’s unclear how many of the affected jobs are at the company’s Bellevue headquarters. It employs around 4,800 people in the area. Nationwide the company employs around 36,000.
The state Employment Security Department had not yet received notification of a mass layoff at T-Mobile on Tuesday afternoon. Such notifications are required before 50 or more employees are laid off in a single location.
The layoffs are in addition to the 3,300 call center layoffs announced in March as part of the company’s effort to improve profitability after customer declines while the company was in the limbo of AT&T’s attempted merger last year.
The new layoffs are affecting “all departments,” spokeswoman Michelle Taylerson said via e-mail.
“The restructuring was based on a thorough review of our entire organization, at all levels. The degree and nature of impact varies – but every function was reviewed,” she said.
The cuts won’t affect technicians in engineering, customer-service representatives in remaining call centers or “front-line” retail employees in T-Mobile-owned stores.
Details of which jobs are being outsourced isn’t being provided.
“In developing the new structure, we evaluated every aspect of our business – including which activities would be best reassigned to outside business partners that are experts in their given fields,” Taylerson said.
T-Mobile’s business picked up last quarter, when it added 187,000 subscribers. That was a sharp reversal from the holiday season when it lost 526,000 customers.
Simultaneously, T-Mobile has been hiring about 1,000 people to pursue more business customers while spending $4 billion on its upgrade to 4G LTE network technology.
But there will still be the net reduction in employees.
“It’s not going to be easy,” Sharma said, “but they can survive.”
The company issued the following statement:
“T-Mobile previously announced its intent to restructure and optimize operations throughout the company in order to best reposition the company, given today’s demanding and rapidly evolving marketplace.
This week we are communicating to our employees a series of additional organizational changes to best position T-Mobile to powerfully compete and return to growth.
We are restructuring the organization and optimizing operations so that we can make critical decisions better and faster in response to market and customer demands. Further, by reducing our cost structure and streamlining operations, T-Mobile will be able to invest in areas where we anticipate the strongest return: modernizing our 4G network; aggressively pursuing the B2B segment; and re-launching our brand.
These changes resulted in a restructuring of key functions and departments across the company including the elimination of some positions and the outsourcing of others. While difficult choices had to be made, restructuring our organization will help us better respond to market and customer demands and bring opportunity for continued career development and growth for many of our employees. We appreciate the contributions of our affected colleagues and will provide them with assistance and support during this transition.”