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Struggling telco Sprint Corp cuts $2.5B in opex; jobs, free snacks next

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(Credit: MoneyTimes) Sprint is the third largest wireless company in the US after Verizon and AT&T, and is closely followed by T Mobile. The debt burden of $12.5bn over next five years will be a testing period for Sprint.Sprint
November 6
1:35 AM 2015

Sprint Corp - a subsidiary of Japan Softbank- and one of the largest mobile services provider in the US is currently on the way to cutting costs in the midst of deploying marketing strategy to recover lost subscribers.

According to IB Times the measures undertaken by Sprint to hit the target of $2.5 billion cost reduction would be sorely felt by its 31,000 strong employees.

Workers are expecting to be laid off with less generous severance pay and those lucky enough to stay onboard would have to continue without any raise in salary and may no longer avail of the daily snack perks of free yogurt and bottled water.

A depressing email from Sprint management was retrieved by The Wall Street Journal telling employees that "nothing is beyond consideration", alluding to having to take away the free yogurt and bottled water rations.

The snack perks were costing USD 600,000 per annum and were difficult to justify notwithstanding it was introduced by CEO Claure when took over at the helm in August 2014. 

The company had shed 7,000 employees since December 2013 with other layoffs in the offing and with shareholders not expected to give the green light to such pricey snack perks.

Sprint would be posting its quarterly financial report Tuesday with analysts expecting it to post yet another quarterly loss, lower year-to-year sales and with a slightly higher number of subscribers.

Analysts expect it to post $8.1 billion in revenue making about 4% down for the same period last year with estimation of loss of 8cts per share. Sprint share is down by 20% for the past 12 months.

Reuters stated in its report that Sprint has been struggling to maintain its ranking in the mobile services market in the US, next only to Verizon and AT&T, by competing with its closest rival T-Mobile which managed to push out Sprint from its 3rd place position.

This resulted in Sprint having to resort to taking costly counter-measures in respect of marketing which included ultra-competitive iPhone pricing plans and helping their customers buy and setup smartphones in a more personal manner by Sprint employees making house calls to their customers.

One other source referred to a desperate need to scale down the ratio of capital-expenditure-to-sales which is currently much higher than that of its 3 telco rivals.

And to scale it down one of the several measures undertaken by Claure was to forgo the free yogurt and bottled water and others like limousine rides by its executives to the airport, and instead have been instructed to take the standard fare taxis.

Sprint news reported on Tuesday the company financial results for the second fiscal quarter of 2015.

There has been a growth in postpaid phone customers for the first time in over two years, record low postpaid churn and over 1 million total net additions.

The company also reported net operating revenue of $8 billion and operating loss of $2 million with other relevant and related figures in this context.

Sprint CEO Marcelo Claure was quoted saying, "As seen in our quarterly results, American consumers are happy to switch to Sprint because they appreciate great products and great service at a great price".

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