Verizon will reduce its workforce by roughly 7 percent as it "better positions itself for future growth," the company announced Monday.
By June, 10,400 employees will depart from the major telecommunications provider as part of a rolling buyout. The employees all volunteered, with some receiving up to 60 weeks' salary, bonus and benefits. Verizon had 152,300 employees at the end of the third quarter.
Employees' last days will occur either the end of this month, in March or in June, depending on the company's needs, Verizon said.
The company says trimming the workforce coincides with its push into 5G technology. Earlier this month, Verizon and Samsung announced they will be working together to release a 5G smartphone in the first half of 2019, giving the wireless carrier its second 5G phone for its yet-to-launch network.
“These changes are well-planned and anticipated, and they will be seamless to our customers,” Verizon CEO Hans Vestberg said in a statement. “This is a moment in time, given our financial and operational strength, to begin to better serve customers with more agility, speed and flexibility.”
However, Verizon using 5G as a justification for unloading employers does not fully explain the company's motivations, said Roger Entner, founder and analyst of Recon Analytics. "This move is about reducing costs," Entner said. "It's not about 5G."
In September 2017, Verizon announced a plan to reduce operating expenses by 10 percent by 2021. Verizon had roughly $126 billion in revenue and $99 billion in operating costs in 2016.
While reducing a workforce helps cut costs, it could also lead to a potential decline in service, according to Entner. "Companies sometimes realize that they've cut not only fat, but also muscle," he said. "And then they have to hire back people."
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