The last thing anyone wants to hear near the end of the year is that they’re about to lose their job. This is the time when you're supposed to be budgeting for holidays, and handling bills against the new year.
For Verizon employees, it's going to be an emotionally destabilising season as the company confirmed reports of mass layoffs. Roughly 15,000 positions are getting the boot, amounting to about 15% of its total workforce. The layoffs are expected to begin next week, with major changes scheduled for November 20.
Lots of Verizon store shutdowns are looking likely
Verizon's rumored job cuts will happen amidst the intense competitive and financial pressure they're facing from the competition. It remains unclear which departments or regions will be affected.
Though analysts warn that less-profitable corporate locations may also be closed or turned to franchises. The company will no longer run those stores itself, but rather sell to independent business owners operating under the Verizon name and selling its products.
Despite the human cost, the market reacted positively. Verizon’s stock rose about 1.5% after confirming restructuring plans. If you owned anything around $10,000 worth of Verizon stock, you should be looking at… eh… well, $150 richer than you were days ago.
For now, thousands of employees are left waiting for official notifications. The report came directly from Reuters, who also said the knowledge came from someone close to the process. The Wall Street Journal later backed up the same information.
Related: T-Mobile’s New Visa Card Could Save Your Family Hundreds Every Year
Verizon isn't a customer magnet currently
The real reason for the cutoffs seems to be subscriber growth. Apparently, it has slowed dramatically. Verizon's new customers are trickling in at a much slower pace, while AT&T and T-Mobile continue to rake them in at fast speeds.
At the same time, cable companies like Comcast and Charter have entered the wireless market with cheaper bundles, making the company's high-priced plans harder to justify. At the same time, Verizon is carrying the weight of several huge spending decisions.
It spent over $50 billion on 5G spectrum, another $20 billion on a major acquisition, and billions more buying TracFone. It's unsurprising that they now compensate for those actions by cutting operating costs wherever possible.
Only a few days ago, Verizon was proudly launching a new low-cost internet plan, which they branded as a $25 Home Internet Lite package. It follows their recent realization that their pricing strategy has reached its limit.
Our financial growth has relied too heavily on price increases, a strategic approach that relies too much on price without subscriber growth is not a sustainable strategy.
Dan Schulman, CEO of Verizon Communications.
Verizon is notoriously the most expensive carrier in the USA. Their basic plan costs around $120 a month, while T-Mobile offers the same number of lines for $90, and even throws in the third line for free. So, there’s not much justification for premium pricing anymore, even if you argue that they have strong nationwide coverage or that they support many MVNOs and still offer widespread 5G.
