Verizon, the world's second-largest telecommunications company by revenue, is currently planning to layoffs 5000 employees in its upcoming cost-cutting and internal reorganization initiatives. The job cuts are for months but report say “many will leave the telecom company soon.
Verizon to begin the layoff of about 5,000 employees this month.
Almost 2500 employees will leave the company this month and the remaining 2500 to complete the approximately 5000 staffs will be relieved of their positions in March 2025.
The Layoffs initiative is aimed at making the company’s operations more efficient, lucrative and profitable than they are now. The U.S based carrier also recently confirmed its intention to acquire Frontier, another U.S-based telecommunication company.
In February this year, Verizon had about about 105,400 full-time workforce. 84% of them live in the United State. However, in June same year, the company commenced a voluntary separation program with incentive payments to encourage employees in certain sections to leave the company.
Verizon aims to cut 4,800 jobs, which is about 4.5% of its total full-time staff. This move is part of the company’s plan to streamline operations and improve efficiency amidst a larger reorganization effort.
However, Verizon has made it clear that it will face charges of between $1.7 billion and $1.9 billion in severity payments from the voluntary separation program. This will result in an expense of around $1.3 to $1.4 billion after taxes.
This large charge is only for the third quarter of 2024 and covers the payouts for employees who are leaving this month. A similar expense is expected in March next year when the next phase of layoffs occurs.
Furthermore, Verizon said the layoffs will not affect “non-strategic portions” of certain businesses in the company but no clear details on which businesses are considered non-strategic in the company.
Verizon is also undergoing an internal reorganization (otherwise known as “business rationalization”). The latter will incur for additional charge of $230 million to $380 million ($170 million to $290 million after-tax) for Q3 2024.
Verizon’s Stock Growth Lags Behind Expectations
The S&P 500 projections was expected to boost Verizon’s stock to grow by 16% this year, but the mobile carrier has slightly missed the mark with a 15% year-to-date increase. In contrast, T-Mobile and AT&T have seen stronger stock performance, with increases of 25.1% and 25.2%, respectively.
For Q3 2024, Verizon reported earnings of $1.08 per share and $33.3 billion in sales. This period is significant for the telecom industry, as the upcoming release of the iPhone 16 series on September 20 is driving high customer demand, with many already reaching out to carriers to secure their devices.
