Verizon Cuts 10,000 Workers Through Buyouts as Part of Restructuring
Verizon Communications said 10,400 employees, or about 6.8 percent of its total staff, were accepted for voluntary buyouts as the company looks to trim $10 billion (around Rs. 72,200 crores) from costs and retool for 5G wireless technology.
The exit packages were available to as many as 44,000 Verizon employees, according to the statement. The buyout is the company’s second-largest, after a 2003 offer in which 21,600 employees accepted severance packages.
The move comes five months after Hans Vestberg took over from Lowell McAdam as chief executive officer at the largest US wireless carrier. Vestberg, who spent his entire career at communications-equipment maker Ericsson AB before coming to New York-based Verizon in April 2017, is making network technology a priority throughout the company.
“For those who were accepted, the coming weeks and months will be a transition,” Vestberg wrote in a letter to employees. “For the entire V Team, there will be opportunities to work differently as we prepare for the great things to come at Verizon.”
Verizon aims to capitalize on its network investment and gain a lead in new 5G services while its competitors are challenged by merger integration. Its largest rival, AT&T, also is preparing a 5G network, but it’s been busy turning itself into a media conglomerate. And T-Mobile US. is seeking approval for its $26 billion (roughly Rs. 1.87 lakh crores) takeover of Sprint.
As part of the revamp, Verizon has also scaled back on its media and advertising ambitions. Earlier this year, the company shut down its Go90 mobile-video operation. It also tacked Verizon Media Group in front of the name of its Oath unit, which contains online properties AOL and Yahoo.
Investors gave a lukewarm reaction to the buybacks, signaling that they may have been looking for deeper cuts. Shares fell 1 percent to $57.09 (about Rs. 4,100) at 11:40 a.m. in New York. The stock was up 9 percent for the year as of Friday.
The staff reduction is part of a four-year, $10 billion cost-cutting program that McAdam announced last year. Employees were told Monday that they were approved for the buyouts, which were capped at 60 weeks of salary and bonuses, and given departure dates depending on the work they were involved with. Some workers will leave by year-end and others as late as June.