T-Mobile revealed its plans on Thursday to cut 5,000 jobs, which amounts to about 7% of its workforce, within the next five weeks. The majority of these layoffs will impact corporate and back-office positions that are considered redundant in relation to other roles. CEO Mike Sievert outlined in a letter to employees that the restructuring will also involve reducing middle management layers. However, the retail and customer care staff, who directly interact with customers, will remain unaffected.

Sievert explained that the decision to downsize is a response to the increased costs of attracting and retaining customers. The evolving economic landscape has prompted a wave of workforce reductions across the technology sector, with companies like Microsoft and Meta also announcing layoffs.

T-Mobile’s latest quarterly earnings report reflected a 2.5% decrease in sales compared to the previous year. Although the company experienced a slight dip in net customer additions from the prior year, it achieved record-low customer churn and profit growth. The stock price of T-Mobile has fallen by over 7% since August of the previous year.

Sievert noted in his letter that T-Mobile has been working on streamlining its operations and expanding its high-speed internet business since the acquisition of rival carrier Sprint three years ago. However, he emphasized the need for the company to focus more intently on a narrower set of strategies to meet evolving customer expectations.

The company aims to notify affected employees by the end of September. T-Mobile anticipates a pre-tax charge of US$450 million in the September quarter due to the layoffs. The impacted employees will receive competitive severance packages based on their tenure, along with accelerated stock vesting, access to career transition services, and other benefits. Sievert assured employees that the company doesn’t have plans for widespread employee reductions in the foreseeable future.