Verizon’s new CEO Dan Schulman is planning a restructuring of the company that involves around 15,000 job cuts. These are the U.S. telecommunications company’s largest ever layoff so far.
The layoffs, affecting about 15% of Verizon’s workforce, are set to take place as soon as next week, according to Reuters. They follow years of efforts to cut jobs and costs. These cuts will reduce non-union management ranks by more than 20%. Verizon also plans to turn about 180 corporate-owned retail stores into franchised operations. This comes as the U.S. carrier lost 7,000 postpaid phone subscribers to its rivals in three consecutive quarters when Wall Street was expecting even bigger gains.
Schulman, who was previously PayPal CEO, became chief executive of Verizon in October. “These will not be incremental changes,” Schulman told investors two weeks ago. “We will aggressively transform our culture, our cost structure, and the financial profile of Verizon in order to put our customers first, compete effectively, and deliver sustainable returns for our shareholders.”
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Schulman, who has been a Verizon board member for seven years said he does not want to hike prices and seeks to be more customer-focused. “Our financial growth has relied too heavily on price increases; a strategic approach that relies too much on price without subscriber growth is not a sustainable strategy,” he said last month.
Verizon had about 100,000 U.S. employees at the end of 2024, after cutting almost 20,000 over three years. The company announced a reduction of 4,800 through a voluntary program and took a nearly $2 billion charge last year. In 2018, Verizon said about 10,400 employees would leave under a prior voluntary exit program.
Verizon has the highest price point among the telecommunications sector, a strategy that analysts have said is difficult to sustain amid rising competitive intensity. Craig Moffett, senior analyst at MoffettNathanson, said the new CEO’s first commitment was to stop the bleeding from subscriber churn, which would require subsidizing expensive handsets for a huge number of Verizon’s subscribers to keep them from leaving.
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“The obvious question was how Verizon planned to pay for that. Now we know,” Moffett said. “What we don’t know is whether these cost reductions will actually help to offset the higher planned costs of retention” of customers.
Verizon recently spent $52 billion to acquire key wireless C-band spectrum in a 2021 auction. It also struck a $20 billion deal to acquire Frontier Communications last year. It also spent $6 billion to acquire prepaid mobile phone provider TracFone Wireless.
An increasing number of companies have been conducting layoffs recently, leaving people without jobs. Companies like Amazon and Paramount have recently come in the news for their massive job cuts.