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Sprint To Layoff 8,000 By End Of Q1

1/26/2009 09:35:00 AM Eastern

Overland Park, Kan. — Sprint Nextel will cut about 14 percent of its workforce, or 8,000 of 56,000 jobs, by the end of the first quarter to save around $1.2 billion per year. The reductions include around 850 positions expected to be eliminated under a voluntary separation plan started late last year.

The carrier will also suspend 401(k) matches in 2009, extend a 2008 suspension of annual salary increases through 2009, and suspend its tuition reimbursement program for 2009.

The company expects to recognize a charge of more than $300 million in the first quarter for severance pay and other costs related to the firings.

Head count reductions in customer care will be smaller than reductions planned for other areas of the business, the company said, to maintain the increased customer satisfaction that has occurred from customer-service improvements, the company said.

The labor cost reductions are part of an effort to make Sprint’s “cost structure more competitive in the industry and to remain financially secure in a challenging economic environment,” the carrier said. Sprint repaid $2 billion in debt in the second half of 2008 and renegotiated credit terms so it would have sufficient liquidity to pay debt coming due during the next two years, the carrier said.