T-Mobile to lay off 5,000 workers as the U.S. economy slows down
Amidst growing economic uncertainty, T-Mobile announced on Thursday its plans to reduce its workforce by 7%, resulting in the elimination of approximately 5,000 jobs. This announcement is yet another indication that the US economy is entering a phase of slowdown.
In a filing by T-Mobile, the phone carrier said it’s set to face a pre-tax charge of roughly $450 million in the third quarter of 2023 due to the reduction in workforce while its fiscal year 2023 guidance remains unaffected. As of the end of the fourth quarter in 2022, T-Mobile maintained a workforce of approximately 71,000 employees.
Furthermore, as mentioned in a letter addressed to employees and obtained by Bloomberg, T-Mobile’s CEO, Mike Sievert, pointed out that the expenses associated with acquiring and retaining customers have risen significantly compared to just a few quarters ago. He emphasized that the company’s expansion into high-speed internet services and other initiatives won’t suffice to meet evolving customer demands. Importantly, he clarified that there are no further plans for layoffs in the upcoming quarters.
As we reported back in 2020, T-Mobile merged with Sprint in a $26 billion deal to take on Verizon. Back then, the former CEO of T-Mobile, John Legere, had confidently promoted the merger with Sprint as a means to generate lasting “high-quality, high-paying jobs.” However, the forthcoming job reductions signal a potential bracing for an economic deceleration. Interestingly, T-Mobile’s competitor, AT&T, also recently disclosed job cuts amounting to 74,130 employees—equivalent to around 32% of its entire workforce—since the beginning of 2021.
Meanwhile, T-Mobile is not alone. Other tech giants including Microsoft, Meta, Google’s Alphabet, and Nvidia have all taken measures to rein in spending. Other companies like Coinbase, Shopify, Netflix, and Twilio have also announced layoffs. In March, Facebook-parent company Meta announced it would cut 10,000 jobs, just four months after it let go of 11,000 employees, making the social giant the first Big Tech company to announce a second round of mass layoffs.
The global economic downturn that started in the second quarter of 2022 is beginning to have a major impact on tech companies. About 965 companies laid off a total of 231,450 employees so far this year, according to Layoffs.FYI, a site that has been tracking all tech layoffs using data compiled from public reports.