US mobile carrier Sprint plans to tighten its belt to the tune of up to $2.5bn in cost cuts over the next six months, a new report claims.
The Wall Street Journal said on Thursday that it has obtained a memo outlining the plan that was sent to Sprint staffers this week by CFO Tarek Robbiati. In it, Robbiati reportedly said he plans to slim the carrier's expenses by between $2bn and $2.5bn.
Meeting that goal "inevitably will result in job reductions," Robbiati reportedly said, although he did not say how many of Sprint's approximately 31,000 staffers would get the axe. An external hiring freeze takes effect immediately.
Still, hitting the $2.5bn figure could be tough. In its most recently reported quarter, which ended on June 30, Sprint's total operating expenses were $7.5bn.
Robbiati added that he will henceforth be going through the company's expenses with a fine-toothed comb. "The main thing to consider when requesting to spend money is to take an owner's mindset by treating every dollar as if it were your own," he wrote.
The announcement comes mere days after Sprint CEO Marcelo Claure said the company will sit out an upcoming auction of wireless spectrum to be held by the US Federal Communications Commission. Claure said it was because Sprint already has all the spectrum it needs, but critics saw the decision as just another way to save money.
Getting Sprint out of the red has long been a focus for Claure. The company is now the smallest of the "Big Four" US carriers, having been outpaced by T-Mobile earlier this year, and it hasn't turned an annual profit in nearly a decade.
In 2014, Claure announced a $1.5bn cost-reduction plan that included around 2,500 job cuts. Now it seems he plans to slice even deeper, all while continuing to invest to allow Sprint to participate in the next generation of wireless networking.
"I realize this may be very unsettling and that you have been hearing similar messages for years," Robbiati reportedly said in his memo. "But it has never been as critical as it is now. Without achieving a low cost structure, we can't invest in other areas, such as our network, that are critical to our long-term success."
Sprint's share price rose by nearly 5 per cent on the news. ®