Why Verizon Is Firing 13,000 Employees, in the Company’s Own Words

Verizon lost a net 7,000 postpaid phone subscribers in the third quarter. Above, a store in New York. (Michael Nagle/Bloomberg)

Key Points

• Verizon CEO Daniel Schulman announced over 13,000 employee layoffs and plans to significantly reduce outsourced labor costs.
• The layoffs are part of a strategy to reorient the company, change its cost structure, and invest in market leadership.
• Verizon’s stock fell 15% under the previous CEO. The company lost 7,000 retail postpaid phone customers in the third quarter.

News that Verizon was conducting its largest layoff to date made headlines last week. The new CEO behind the move has now told employees why.

Chief Executive Daniel Schulman said in an email to staff early Thursday morning that Verizon has begun shedding “more than 13,000 employees across the organization,” and is seeking to “significantly reduce” outside labor costs like outsourced jobs.

This letter, with the subject line “Building a stronger Verizon,” reviewed by Barron’s and confirmed as legitimate by the company, appears to be the company’s first official written communication about the cuts. Previously, Schulman had signaled layoffs were coming in an internal call about the company’s third-quarter earnings, according to a person close to the company.

Last week, The Wall Street Journal said Verizon, the largest U.S. telecom operator, was planning to eliminate 15,000 jobs. Barron’s later confirmed that report.

The Verizon board appointed Schulman, the former CEO of both PayPal and Virgin Mobile USA, to the top job in early October. He succeeded Hans Vestberg, who will now serve as a special adviser until October 2026.

Under Vestberg, who took the reins in mid 2018, Verizon stock fell 15%. Earnings before interest, taxes, depreciation, and amortization rose from $47.2 billion in 2019 to $48.8 billion last year.

The stock fell 5.1% on Oct. 6, when news emerged that Schulman was taking over.

Schulman said on an Oct. 29 call discussing earnings that Verizon needs to “invest to be the best in the marketplace” and that “we’re fully committed to covering all of those investments through cost reductions.”

That sheds light on why he hit the ground running with the biggest layoffs in the company’s history. In Thursday’s email, he said he wants to “reorient” the entire company and change it throughout because the current cost structure is limiting. “In the coming weeks, your leaders will share new organizational structures and priorities that align with our direction as a company,” the letter said.

Verizon has been fighting for subscribers in an intensely competitive marketplace. It lost a net 7,000 retail postpaid phone customers during the third quarter. “We need to change and evolve as a company to meet the needs of our customers and expand our market leadership,” Schulman wrote.

Verizon also let go of approximately 4,800 U.S.-based management employees through a voluntary separation program that was announced last year and concluded in March.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.