Sprint Aims for $2.5 Billion in Latest Cost-Cutting Planby
Sprint Corp., the unprofitable and cash-strapped wireless carrier, will aim to cut between $2 billion and $2.5 billion in costs over the next six months and eliminate more jobs.
The fourth-largest U.S. carrier informed employees of the plan earlier this week, days after saying it won’t participate in an upcoming U.S. airwaves auction where it could have won new airwaves at a time when mobile networks are clogged with video traffic.
“We must change our cost structure so we can fuel our growth and operate more efficiently,” the company said in an e-mailed statement Thursday. “It is likely that some jobs will be impacted but it’s premature to discuss the details as we are in the early stages of the process.”
This is Sprint’s second round of cuts under Chief Executive Officer Marcelo Claure. Last November, Sprint began the process of eliminating 6.5 percent of its 31,000 employees, or about 2,000 jobs. Sprint’s cost-savings target in that round was $1.5 billion.
As part of his turnaround plan in his first year on the job, Claure has focused on network improvements, half-price offers and tablet promotions to lure customers. He’s also cut operating costs, helping boost earnings before interest, taxes, depreciation and amortization to $2.08 billion in the fiscal first quarter that ended June 30. That topped the $1.8 billion average of estimates compiled by Bloomberg.
At the same time, the company has been burning through cash. Sprint’s cash and equivalents fell about $2 billion during the fiscal first quarter, which was 2.5 times the decrease in the period a year earlier.
Japan’s SoftBank Group Corp., which owns more than 83 percent of Sprint, has recently rekindled a commitment by buying shares.
On Sept. 15, Moody’s Investors Service downgraded Sprint, cutting some of its unsecured ratings to Caa1, a level that means very high credit risk and poor standing. The bonds due February 2025 have tumbled 16 percent since the Moody’s downgrade, while the stock slumped 22 percent.