In a significant shift, Verizon is preparing for its largest wave of layoffs ever, targeting approximately 15,000 positions. This restructuring effort is set to occur swiftly, as early as the upcoming week, according to insider information. Reuters confirmed that the company’s new CEO is spearheading this initiative to redefine Verizon’s standing in the competitive wireless landscape.
The telecom giant has faced mounting challenges as it works to retain customers who are tempted by more affordable offers from traditional competitors and innovative bundles by cable companies. A representative from Verizon chose not to comment on the specifics of the layoffs or overarching business strategy at this stage.
The impending cuts represent about 15% of the total workforce, with non-unionized management roles experiencing a reduction exceeding 20%. Additionally, Verizon plans to transition 180 of its retail outlets to franchise operations, reducing operational costs.
Dan Schulman, who assumed the CEO role in October after a successful tenure at PayPal, is taking charge amidst a surge of aggressive marketing by rivals like AT&T and T-Mobile. These companies have been heavily discounting during new device rollouts, a tactic Verizon has struggled to match.
Schulman has articulated a need for significant change, which he refers to as a “cost transformation”. His vision involves streamlining operations while responding more adeptly to customer needs. “We will be a simpler, leaner and scrappier business,” he affirmed.
The strategic adjustments arise from pressing statistics. In a recent financial quarter, Verizon gained only 44,000 new subscribers; in contrast, AT&T and T-Mobile reported gains in the hundreds of thousands, pulling further ahead.
Despite the news, investor responses have been modestly optimistic, as seen with a 1.5% increase in Verizon’s share value. Historically, however, the company’s stock performance has lagged, showing minimal growth compared to broader market trends.
Schulman, a Verizon board member for seven years prior to his current appointment, aims to shift focus from reliance on price hikes. Acknowledging this, he stated, “Our financial growth has relied too heavily on price increases.”
Over the past three years, the company’s headcount has diminished by about 20,000, reflecting a voluntary departure of employees in past reduction initiatives. Schulman’s plans include cost-savings maneuvers-potentially achieving these through personnel cuts-to fund necessary customer-retention strategies like device subsidies.
Notably, Verizon has incurred substantial expenses in its strategic endeavors. These include multibillion-dollar investments in wireless spectrum acquisitions and purchases of companies intended to bolster strategically its customer offerings.
Industry expert Craig Moffett commented on the scenario, highlighting customer retention as Schulman’s immediate focus. It remains uncertain whether these latest reductions will sufficiently offset the increased expenditure required to retain subscribers. The looming layoffs were first reported by The Wall Street Journal, indicating a pivotal moment in Verizon’s operational realignment.
