Crown Castle has unveiled a restructuring plan that will reduce its workforce by approximately 15%, a move that translates to about 750 job losses based on its current employee count of around 5,000. This decision ties closely to the reduced investment of telecom firms.
Not only will the company be downsizing its staffing levels, but it is also set to discontinue offering tower installation services. Despite this, it will still persist in providing site development services on its towers, and will utilise this restructuring to consolidate its office space.
With predictions of “lower tower activity”, the restructuring plan seeks to adjust the business operation to better align with current demands. The scheme should assist the company in lowering its costs, according to their second-quarter results announcement.
An alteration like this from Crown Castle was widely anticipated, following their announcement of lowered full-year earning and profit expectations. Nonetheless, the company exhibited robust performance for the Q2 2021, with their revenues and adjusted EBITDA both seeing a 10% YoY growth. However, the downward revisions indicate looming challenges.
Crown Castle’s CEO, Jay Brown, sees potential in the 5G deployment scope in the US and believes that despite the cutbacks in network expenditure, long-standing leasing arrangements with their customers will have a relatively minor impact on their site rental revenues.
The overhaul is expected to cost Crown Castle roughly $120 million, with a significant portion anticipated in the third and fourth quarters. About $70 million will go towards severance costs and other related expenses, while $50 million will cater to the planned office space consolidation.
The headcount reduction and halt in tower installation services are expected to be implemented in the current quarter, while the reduction in office space throughout the year will insure some continuing leases beyond the end of the year.
This move does not singularly pertain to Crown Castle as Verizon, Cisco, Dish Network, Ericsson, and Vodafone have all announced workforce reductions. This reflects the industry’s current challenges, under the squeeze of rising labour and capital costs, an unpredictable economy, and decreased spending from telecom clients.
