Sprint Spectrum L.P. has begun streamlining its operations nationwide, eliminating engineering and operations positions. Sprint PCS spokesman Tom Murphy said the reorganization reflects the company’s move from building out new markets to an operational phase.
Murphy declined to comment on how many employees will lose their jobs, but according to a company memo obtained by RCR, the restructuring impacts less than 10 percent of all 7,000 current positions at Kansas City-based Sprint PCS. Some employees will have the opportunity to relocate.
The memo said, “Sprint PCS will move from maintaining full-scale E&O offices in Phase I markets to having three regional site development offices located in Dallas, San Francisco and Mahwah, N.J. The regional offices will include property and construction personnel dedicated to maintaining and expanding coverage in our major markets across the country. Management of all other engineering functions will be centralized in Kansas City.”
Murphy said Sprint PCS will complete the restructuring before the end of the quarter. Sprint PCS plans to close all the affected offices by April 1, said one employee.
“I’m extremely disappointed in the way this turned out,” said one manager in the E&O division. “The price we all have paid to do this … People all over the country put a network up in less than a year.”
Sprint PCS, a nationwide personal communications services licensee, aggressively rolled out Code Division Multiple Access service throughout 1997, ending the year with launches in 134 cities. Rollouts throughout 1998 and early 1999 will be equally aggressive as the company plans to launch some 100 cities, primarily in Sprint Corp.-owned basic trading areas, which will operate under the Sprint PCS name.
Some sources close to the situation believe the company has rolled out service too fast and incurred too much debt. But Sprint PCS maintains this is not the case. The move simply reflects a natural shift into an integrated operation, and in fact, it plans to add 10 percent to 15 percent more jobs to meet increasing customer demand, said Murphy.
RCR has learned that Sprint PCS has shut down and pulled employees out of some Southeast BTA markets it originally had planned to launch this year. Murphy said the company is evaluating whether to sign on affiliates to launch those markets.
“We are making some changes. It’s very minimal staff reductions,” said Murphy. “We are going to build those markets eventually, on our own or through affiliate markets. We are building a vast majority of our D and E markets.” Murphy said only one or two markets are affected, while others report as many as six markets have been shut down.
Sprint, which owns 40 percent of Sprint PCS, said in its third-quarter 10-Q report it planned to spend, excluding the license fees, a total of $2.3 billion through 1999 to build out its BTA networks.
Industry watchers question whether more restructuring is in store for Sprint PCS. Recent developments could be some indication. Earlier this month, Charles Hoffman left Sprint PCS less than a week after being named president and chief executive officer of Rogers Cantel in Toronto, Canada. He was president of Sprint PCS’s Northeast region. Ronald LeMay, who left Sprint Corp. in July to become chairman and CEO of Waste Management Inc., rejoined Sprint just four months later in his vacant position as president, chief operating officer and board member. LeMay was chief executive of Sprint PCS from March 1995 to September 1996.
Then there are the unhappy cable partners that own Sprint PCS.
“Sometimes when you’re owned by four different companies, you’re pulled in four different directions,” speculated one industry analyst. “The partners may want to slow down and stop the hemorrhaging. You’ve seen what the cable guys have done with Teleport.”
Cable companies Tele-Communications Inc. (30 percent), Comcast Corp.(15 percent) and Cox Communications Inc. (15 percent) are ownership partners with Sprint in Sprint PCS. Analysts say the cable partners have wanted out of the partnership for about a year. The rollout phase hasn’t given them return on their investment, and increased competition in the cable industry is forcing them to focus on their core businesses. The three recently got out of the costly local telephone business by dumping their stakes in Teleport Communications Group. AT&T Corp. acquired Teleport in a stock swap valued at about $12 billion. TCI declared its strong support for the merger.
Sprint reportedly is intensifying its search for a European partner to construct a possible merger or partnership scheme that would give the long-distance carrier enough cash to buy out its PCS partners.
