T-Mobile's 5,000 Job Cuts Start of US slowdown?

Interesting analysis of what's possibly driving T-Mobile's significant layoffs. It doesn’t make it any easier for those going through it, but may shed some light on larger industry trends as people consider whether to pursue continued employment in the Telecom industry.

9/5/23

Kagan: Is cutting 5,000 jobs the start of T-Mobile US slowdown?

After watching T-Mobile US emerge from its cocoon over the past decade, and after promising to create even more jobs and growth, suddenly they have announced they’ll be cutting 5,000 jobs. That is very confusing news to many investors and customers who are now worried about continued growth and stability. So, let’s explore what these job cuts could mean for T-Mobile and to you.

Over the past decade, during their years of growth, I have warned that this new T-Mobile growth wave was an anomaly compared to their competitors in the changing industry and it would not last forever.

The slowdown in acquiring new customers has already hit competitors AT&T and Verizon. That’s why they tried to expand with WarnerMedia, AOL and Yahoo.

So, the natural next question is, do the sudden T-Mobile job cuts mean this same thing is now starting to happen to them?

Is T-Mobile growth slowing down like AT&T and Verizon?

Wireless remains one of the most important industries we have. In fact, I expect to see growth to continue. However, it looks different going forward. This step-like growth is how the industry has grown over decades already. And that will only continue moving forward.

We have reached the end of one chapter as we begin the next. Wireless may have reached the limit of traditional growth. Now, growth will come from new areas.

Why has T-Mobile during the past decade been defying the odds and showing growth. They have been winning customers from AT&T Mobility and Verizon Wireless.

Why T-Mobile has been defying the odds with growth in past decade
There are at least three reasons. One, until a decade ago T-Mobile was struggling. Then they finally woke up and started to succeed again. Two, their lower prices have been attractive and helped them take business from competitors. Three, the weak economy is taking its toll on users looking to save money.

Yes, it’s unfortunate, but today the weak economy is threatening the ongoing stability and growth of the wireless marketplace. Increasingly users are looking for lower cost alternatives.

Yesterday, wireless would have been expendable. During a weak economy, users would simply cancel their wireless service. That’s no longer the case.

Today, wireless has become our primary source of communication and increasingly the smartphone does everything for us. That means it is becoming an indispensable part of the equation.

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So, while the industry is not at risk of losing users, customers are looking for new ways to reduce costs.

Pre-paid wireless, MVNO like Xfinity Mobile, Spectrum Mobile and more
That’s why the pre-paid or MVNO wireless market is continuing to grow. These are services like Xfinity Mobile, Spectrum Mobile, Optimum, Cricket, PureTalk, Consumer Cellular and countless others, larger and small.

These resellers can cost the user roughly half what they would pay from one of the networks directly.

While AT&T and Verizon have been dealing with this slowdown over the past decade, T-Mobile has been temporarily evading this painful reality.

A decade ago, T-Mobile was crashing and burning. Then they hired a CEO who saved them. They finally started to make the right moves. T-Mobile finally became a force to be reckoned with. They have been working hard to make up for lost growth.

That being said, as I have always warned, T-Mobile growth wave has a limit. Someday, their growth would finally slow like AT&T and Verizon?

Many wonder if this is the start of a T-Mobile slowdown?
T-Mobile CEO Michael Sievert says job cuts will not impact company. He says the company will be cutting 5,000 jobs, which accounts for 7% of their workforce.

There is no way to hide this. This is a meaningful cut.

While he says these jobs are duplicative or not relevant to their current direction, many are wondering why, out of the blue, so many jobs are being cut, and so quickly?

Is there something going on behind the scenes we should be aware of? So, let’s keep our eyes open and on this story going forward.

I have warned this time would come. Are we approaching that point in time? Stay tuned.

https://www.rcrwireless.com/20230905/workforce/kagan-is-cutting-5000-jobs-the-start-of-t-mobile-us-slowdown

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7 replies (most recent on top)

You can blame the IRA for driving inflation in all sectors, but does not in any way address AI, which will replace most jobs and which TMO appears to be fully embracing. AI and robots will eventually replace humans. Then SKYNET will finish ki-ling us off!

"Care to explain how the Inflation Reduction Act has anything to do with this?"

The so called "Inflation Recuction Act" was actually a disguised Climate Change bill that pumped @$750M into the economy. That included with approximately $6 Trillion dollars in Government spending over the last 3 years has driven up inflation to record highs not seen since the early-to-mid 1970's. At the same time, excessive Government regulations have suppressed growth, while impacting supply (e.g., natural gas, fossil fuel, etc.) and consequently have driven up prices that consumers and businesses pay for everyday staples.

Inflation puts pressure on companies to increase their prices while consumers typically respond by cutting back on spending which ultimately impacts corporate profits. Diminishing corporate profits cause companies to cut their expenses through employee layoffs.

If you'll recall, right prior to the pandemic the economy was booming, all sectors of the economy were strong and employment rates for all segments of the population were way up.

Basically it's a cause and effort situation. Better government policies and legislation have more beneficial impacts. The inverse is true which unfortunately we have been living through the last three years. It's been a disaster for America.

The C-suite will make out like fat cats during this layoff. The game is rigged against the workers. Same playbook. Toss the workers to artificially boost the stock. Cash out and enjoy the returns. Rinse and repeat.

"I think what you're referring to are actually more the result of disastrous Governmental policies and legislation (e.g., "Inflation Reduction Act," etc)."

Care to explain how the Inflation Reduction Act has anything to do with this?

This has been happening over the past year and TMO has been laying off well before this latest announcement. Hiring has slowed throughout most industries according to recent reports at this point but for anyone following the news, tech basically started the layoff trend which has been happening over many months now. Now it seems that the slowdown is starting to affect other industries as well. I have heard from recruiter friends that from what they have seen it is even worse than 2008 for job seekers right now. Hopefully it will be a "soft" landing as some economists have predicted but when household debt us so high coupled with mass inflation, high interest rates, etc. I'm not so sure.

"Prices are going up and up everywhere while wages aren't. Corporations and the C-suite continue to make out like bandits at the expense of all of us and people still think this type of capitalism is something worship."

I think what you're referring to are actually more the result of disastrous Governmental policies and legislation (e.g., "Inflation Reduction Act," etc).

Prices are going up and up everywhere while wages aren't. Corporations and the C-suite continue to make out like bandits at the expense of all of us and people still think this type of capitalism is something worship.

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T-Mobile's 5,000 Job Cuts Start of US slowdown?

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