More than 10,000 Verizon employees accepted a severance package to voluntarily leave the telecom giant. The move is an attempt by Verizon to slash about $10 billion in operational costs as it positions itself to boost its focus on 5G.
The severance package offered up to 60 weeks worth of salary, bonuses, and benefits depending on the length of employment. Verizon announced that about 10,400 employees accepted the deal that was reportedly offered to around 44,000 workers.
In a Securities and Exchange Commission filing, Verizon said it expects to take between $1.8 billion and $2.1 billion in charges tied to the move as part of its fourth quarter financial results.
Those accepting the severance package will leave the company in three waves beginning at the end of this year. The next round will leave at the end of next March with the final wave leaving by mid-2019. The program will slice approximately 15 percent from Verizon’s total workforce.
“These changes are well planned and anticipated, and they will be seamless to our customers,” said Verizon CEO Hans Vestberg, 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.”
Verizon reported consolidated revenue of $32.6 billion for the third quarter of this year, an increase of 2.8 percent year-over-year. The company reported non-GAAP earnings per share of $1.22, up from 98 cents in the third quarter of 2017. The company’s wireless revenues were $23 billion for the quarter, an increase of 6.5 percent year-over-year, while its wireline revenues were $7.4 billion.
The severance package plan was initially offered up in September. Verizon at that time explained that the move was part of a broader corporate restructuring program. The company at that time also signed a $700 million agreement with India-based Infosys to outsource much of its IT operations. The deal is structured so that Verizon employees that currently handle those jobs become Infosys employees.
Vestberg took over as CEO at Verizon in August, having replaced the carrier’s long-time leader Lowell McAdam. Vestberg had previously served as CEO at Nordic-based vendor Ericsson, and came to Verizon last year as CTO.
Vestberg last month stamped his authority over Verizon by announcing a corporate restructuring focused on three areas: consumer, business, and media. That move included a re-architecting of its leadership team.
In a memo at that time, Vestberg said that the restructuring is intended to help the company maintain its 5G leadership and also better position it for success with customers. He added that it will also help the company grow its “network-as-a-service” business.