T-Mobile Pays the Price for Offering Cheap Phone Plans, Cuts 5,000 Jobs
The wireless phone carrier T-Mobile has announced plans to let go an estimated 7 percent of its workforce, and the layoffs are being blamed on the company’s decision to offer discounted plans to new customers.
T-Mobile US CEO Michael Sievert announced the coming job cuts last week in a memo to company employees.
“Impacted roles are primarily duplicative to other roles, or may be aligned to systems or processes that are changing, or may not fit with our current company priorities,” Sievert said. “Some areas of the business will be implementing more centralized models where they can improve efficiency and effectiveness and save costs.”
The CEO added, “I know this email will create uncertainty, but I believe transparency about what is happening, and how we’re taking care of our impacted colleagues, is important.”
Writing for the wire service Reuters, technology reporter Chavi Mehta attributed the company’s woes to its decision to offer cheap plans to customers looking for a bargain.
“The carrier has been taking the lion’s share of subscribers looking for cheaper plans in the last three quarters through discounted bundles, but that has taken a toll on T-Mobile,” wrote Mehta.
Fast Company noted T-Mobile has been busy throughout 2023 attempting to expand its overall customer base through bargain deals.
But those deals came, and new customers have increased the carrier’s operating costs.
Siever acknowledged in his letter announcing job cuts that his company is operating in a market that is more expensive than it was in previous years.
“What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago,” Sievert said.
The company said last month it expects to announce the addition of between 5.6 million and 5.9 million new customers, according to Reuters.
The CEO did not get into specifics in regard to the numbers.
But T-Mobile has been offering plans for as low as $10 per month, an offer that millions of consumers likely found difficult to turn down.
T-Mobile’s basic prepaid $10 plan includes 1,000 talk minutes, 1,000 text messages and 1 GB of data.
But for only $35, customers can receive unlimited talk, text, and 12GB of data. Customers can also pick plans anywhere in between.
Customers who want to sign a contract for a family plan with unlimited talk, text, and data with three lines can pay as little as $110 per month.
But according to Mehta, those deals have come at a significant cost for the company — and for 5,000 people who will be without a job in the coming weeks.
Siever told his employees, “It is hard to part ways with our coworkers who will be impacted, and I want to let you know that our focus during this time of change is to do everything we can to treat each of them with as much care and support as possible.”
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