Sprint CFO says the wireless carrier's cost structure is 'bloated'
(Thomson Reuters)
New Sprint CFO Tarek Robbiati has inherited what he calls a "bloated" mess at the struggling wireless provider.
During a call with executives from Sprint's controlling shareholder, SoftBank Group Corp., Robbiati admitted "our cost structure is bloated."
The company's new CFO plans to cut 10% of operating costs for a $2 billion savings. He also plans to cut another $500 million in equipment spending, according to Bloomberg.
The cost-cutting measures outlined by Robbiati will be completed over the next six months. The company will engage in a second round of cuts in mid-to-late 2016.
The company is facing mounting finance issues after Moody's Investors Service downgraded Sprint to junk-rated credit. Most recently Sprint's CEO decided to pull out of an airwave auction that could have improved Sprint's quality of service.
Sprint spent $7.1 billion in capital expenditures last year, more than 20% of its revenue. Robbiati says the industry average is closer to 17%.
Shares at Sprint were trading at $4.54 on Friday morning, up from $3.73 on September 29. Here's a quick look at the company's share price surge from Investing.com:
(Investing.com)
Robbiati recently said budget cuts "inevitably will result in job reductions," according to The Wall Street Journal. A full plan has not yet been revealed.
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