The telecom giant of the United States of America, Verizon Communications has declared massive layoffs, which would reduce the workforce strength by approximately 5,000 by March 2025. It is all aimed at cost cutting and internal restructuring that Verizon feels will make them survive in the ever evolving telecommunication sector.
What’s Behind the Layoffs?
Cuts are being made based on Verizon’s voluntary separation program which was begun earlier in June of the year 2024. In other words, the company allows employees to self-select out of the organization in exchange for some compensation. The idea here is to achieve a reduction in the workforce in a manner that seems (if not entirely) less painful to those undergoing such change.
Verizon anticipates absorbing expenses up to USD 1.9 billion in the third quarter of this year, primarily for employee termination costs. The above severance packages will however ease this loss to the employees, and after tax the payment is expected to be little less, about USD 1.3 to USD 1.4 billion.
Who is Going to be Impacted?
Currently, Verizon has a workforce of approximately 105,000 employees, and most of them are based in the United States. Of that, 4,800 employees are anticipated to be impacted by the voluntary separation program. 5,000 might not seem like a large number in comparison to the total workforce, it remains 4.5% of their employees.
Making matters worse, there are rumors that the layoffs could extend beyond 5,000 individuals. Therefore, to all the people who are asking whether or not the cuts are over after September, the reply must be, “Not yet.”
The Performance of Verizon’s Shares
Similar to any other large organization, Verizon’s future is reflected through the performance of its common stocks. Laying off employees is often defensible when the company cutting its workforce makes economic sense: for instance, at the time it let go of its hundreds of employees, Verizon was predicted to record a 16% increase in its stock.
Unfortunately, the stock was at the edge of that value and this slightly pulled down the expectation of the investors. To make it even more fun, Verizon’s competitors at the moment, T-Mobile and AT&T, are both enjoying improved stock value, which has risen roughly to 25%.
This means Verizon might be struggling from its competitors. However, this setback does not seem to deter Verizon’s advancement into the market, not to mention other recent plans of the company such as the acquisition plans of the firm to acquire Frontier Communications Parent Inc for USD 20 billion in cash. This move is expected to assist them to gain a better stand within the market though, only time would tell if it would be enough.
What does this mean for Verizon employees?
For those employees directly affected by the cutthroat actions of Verizon, the company has agreed to provide them with severance packages under the merger deal. These severance payments will be between One US Dollar (USD 1.7 to USD 1.9 billion before taxes. It is not much for someone to be able to replace the lost job but it grants a certain amount of financial security during that period.
It is going to affect various departments, since Verizon has long been attempting to cut costs and trim down its workforce to better streamline the company. Since change continues being the only constant in the industry, firms such as Verizon may have to downsize in order to remain flexible.
What’s Next for Verizon?
This decision by Verizon to make cuts and restructure is not unusual as the trend has been observed in numerous industries. In fact, competition and advancements are rising at a high rate thus forcing even a player like Verizon to stay alert. Altig believes these reductions, along with the acquisition of Frontier Communications, will make the company sustainable in the future.
