Verizon plans to cut 15,000 jobs to reduce costs as the U.S. telecommunications company struggles to retain new customers, keep pace with competitors and shift more of its retail stores to a franchising model.
What caused Verizon’s massive job cuts?
The cuts, which are considered the company’s largest ever, will begin next week as the CEO aims to change strategy. The wireless carrier faced mounting market pressure from competitors offering cheaper wireless service and internet plans, according to people familiar with the matter, as revealed to the Wall Street Journal and Reuters.
Verizon also aims to transition about 180 to 200 retail stores into franchise operations, shifting employees off its payroll, the sources told The Wall Street Journal and Reuters. The cuts represent 15% of the company’s workforce after several attempts over the years to cut jobs and costs.
The company had been losing ground in retaining new customers in the wireless service and home internet markets, per the Wall Street Journal. Verizon had lost postpaid phone subscribers for three straight quarters despite offering a price-lock guarantee to customers in April.
‘We will be a simpler, leaner and scrappier business’
Verizon reported a net loss of 7,000 consumer postpaid phone connections last quarter, missing the 19,000 that experts had expected. Other rival carriers like AT&T and T-Mobile continued to gain new customers through their subscriber plans and trade-in discounts.
Verizon CEO Dan Schulman was appointed in early October and is a former CEO of PayPal and Virgin Mobile USA. He said the cuts are the first step toward making aggressive changes, such as “cost transformation, fundamentally restructuring our expense base,” according to Reuters. “We will be a simpler, leaner and scrappier business.”
Although Verizon is known for having some of the highest prices among mobile carriers, Schulman said the changes are intended to lower costs and make the company 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, per the outlet.
Verizon joins other major companies with massive layoffs over the past several months. Blavity reported that UPS, Amazon, and Target are among the retail and shipping services that have announced job cuts.