With a sharp decline in net revenue, the company continues to implement restructuring measures to optimize costs. Another round of layoffs is approaching, significantly impacting thousands of employees.
1. A sharp decline in net revenue triggers another wave of layoffs at AT&T
Telecommunications giant at&t (nyse:t) is facing severe challenges as its net revenue plummets, forcing the company to initiate another massive workforce reduction. From 2018 to January 2023, at&t’s employee count dropped from 268,220 to 160,070—a reduction of over 40%.
This is not merely a downsizing but a reflection of the company’s financial downturn. In 2018, at&t reported net revenue of $19.4 billion, but by 2022, this figure had plunged to negative $8.5 billion. Meanwhile, earnings per share (eps) have been on a continuous downward trajectory for nine consecutive quarters, dropping from $0.89 in q2 2021 to $0.64 in q3 2023.
Amid this uncertain business landscape, ceo John Stankey made a controversial decision in May 2023: he mandated approximately 60,000 managers to return to the office after a prolonged period of remote work during the covid-19 pandemic.
Additionally, at&t drastically reduced the number of management offices from 350 to just 9 locations. This means many employees now face longer commutes, potential relocations, or even the tough choice of leaving the company altogether.
Stankey stated that the office consolidation aims to enhance collaboration and streamline personnel for greater efficiency. He also hinted that the company anticipates a wave of voluntary departures following this decision.
According to Bloomberg, about 15% of the managers affected by the return-to-office mandate—approximately 9,000 employees—are expected to leave at&t. However, internal sources suggest the actual number could be as high as 25,000.
At&t’s aggressive cost-cutting measures indicate its efforts to recalibrate its strategy in response to financial difficulties. However, the significant loss of managerial staff may pose new challenges for the company in the coming phase.
2. AT&T aims to save $2 billion and improve employee earnings
AT&T, one of the largest telecommunications corporations in the U.S., is implementing a cost-cutting plan of up to $2 billion to optimize operations and enhance financial performance. This initiative follows the company’s successful savings of $6 billion, achieving that target months ahead of schedule.
A key driver behind AT&T’s decision is the revenue per employee gap compared to major competitors like Verizon (NYSE: VZ) and T-Mobile (NASDAQ: TMUS). According to Bloomberg data, as of March 2023, each Verizon employee generated approximately $1.2 million in annual revenue, while T-Mobile’s figure stood at $1.1 million. In contrast, AT&T reported significantly lower revenue per employee, reaching only $0.8 million as of December 2022.
Optimizing costs will not only boost AT&T’s profitability but also allow the company to invest in critical areas such as 5G technology, network infrastructure, and employee benefits. If successful, this plan could help AT&T close the productivity gap with its competitors while strengthening its position in the highly competitive telecommunications market.
However, large-scale workforce reductions indicate that AT&T is grappling with challenges in maintaining financial efficiency. This raises concerns about the long-term impact on the company’s operations. Will this downsizing strategy help AT&T recover, or will it only deepen its struggles?
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