The new year is seeing Sprint dramatically step up its cost-cutting efforts, with the third-largest U.S. wireless carrier announcing today that it’s cutting 8,000 jobs, or 14 percent of its workforce.
The labor reduction, which includes 850 employees who accepted a voluntary layoff package last year, will save $1.2 billion annually, the company said.
Sprint (NYSE: S) told InternetNews.com the layoffs will not impact its Clearwire WiMAX partnership or the impending launch of Palm’s new Pre smartphone in the first half of this year. Sprint is the exclusive carrier for the closely watched handset, which is seen by many industry observers as key for Palm.
“We have not determined specific impact to business units, but we are committed to maintaining the high level of customer care that we have achieved in the last year,” spokesperson James Fisher told InternetNews.com. “We are committed to ensuring that our networks continue to operate at their current best-ever metrics and want our customers to know that this will not impact the quality of service they are used to.”
The news comes at a critical time for Sprint, given subscriber losses last year that pushed it further behind the nation’s No. 1 carrier, Verizon Wireless, and second-place carrier AT&T. Fisher said Sprint currently has 51 million subscribers, which represents a loss of 3 million since November 2007, 1.3 million of which came during third quarter alone.
But Sprint’s rivals continue adding users with increases in every quarter of the past year: As of November 2008, AT&T’s total subscriber base was 74.9 million, while Verizon Wireless totals 84 million following its acquisition of Alltel — a deal that pushed it into the top spot as the nation’s largest carrier.
“We have had customer losses, but we also believe we must reduce our overall costs to ensure that we remain financially sound in the current challenging economic environment,” Fisher said.
The company’s move to cut expenses also has prompted it to suspend matching funds for employee 401(k) retirement plans, extend last year’s freeze on pay increases through 2009 and cancel a tuition reimbursement program for the year, according to a company statement.
Sprint said its layoffs, which would be completed by end of March, will not impact customer support and that staffing cuts will be fewer within other customer-facing groups.
Though Fisher stated the cost cuts won’t impact Sprint’s ongoing WiMAX partnership with Clearwire, it may not bode well given that Clearwire’s ambitious network plan may have financial worries of its own.
The $14.5 billion effort, of which Sprint owns 51 percent, debuted its first network in Baltimore last year, with the second leg launching in Portland, Oregon earlier this month.
However, Clearwire executives warned last year the effort needs an additional $2 billion to $3 billion for completion.
[cob:Special_Report]The company’s 4G technology promises to blanket entire cities with Web access for laptops, mobile phones and other wireless devices, which could see speeds of up to five times faster than traditional wireless networks. Other investors in Clearwire include Comcast, Google, Time Warner, Bright House and Intel.
AT&T and Verizon Wireless, meanwhile, are placing their bets on the competing Long-Term Evolution (LTE) standard, which also promises faster and cheaper Internet services.
Sprint also said today that it would report its fourth-quarter results on Feb. 19, eight days earlier than initially stated. Fisher said internal accounting requirements were completed sooner than expected and the reason for the date change.
