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Sprint's Latest Cost Cuts Could Complicate Effort to Improve Network, Stem Defections

The company is reportedly looking to cut another $2.5 billion from its annual costs.

Asa Mathat for Re/code

Sprint is embarking on yet another effort to shrink its costs, a project that is in its early stages but could see as much as $2.5 billion in reductions.

While perhaps necessary to stem losses, cutting costs will likely put added strain on the company’s other priorities — to reverse customer defections and meet CEO Marcelo Claure’s goal of having the No. 1 or No. 2 network by 2017 — a target he reiterated in an interview last week.

Claure has talked about some relatively painless moves, such as creating outside entities to absorb some costs related to device leasing and network upgrades, but the cuts will also include job losses, though Sprint isn’t ready to talk details.

In a statement, Sprint confirmed it is considering the cuts, but stressed that cost reductions are only one piece of its turnaround bid, which also includes the network improvement plan, improving customer experience and bolstering its leadership team and corporate partnerships.

“We have begun an effort to significantly take costs out of the business so the transformation of the company will be sustainable for the long-term,” Sprint said in a statement. “It is likely that some jobs will be impacted but it’s premature to discuss the details as we are in the early stages of the process.”

Sprint said over the weekend that it would sit out an upcoming spectrum auction, saying it had sufficient holdings to meet customer needs.

Earlier this week, Sprint announced plans to hike fees on its signature unlimited data plans.

The Wall Street Journal first reported on the company’s cost cut plans, citing an internal memo.

Here is Sprint’s full statement:

Recently we communicated with Sprint employees to update them on the progress we are making to transform our business. We discussed the improvements we have made to many of our key metrics including net adds, churn, and our network. We are laser focused on creating a superior network, being the price leader and providing an amazing customer experience. We are pleased that our business has momentum and we are heading in the right direction.

We also shared with our top leaders that in order to be successful, we must change our cost structure so we can fuel our growth and operate more efficiently. We have begun an effort to significantly take costs out of the business so the transformation of the company will be sustainable for the long-term. It is likely that some jobs will be impacted but it’s premature to discuss the details as we are in the early stages of the process.

We believe the steps we are taking across our business are critical to ensuring Sprint is a viable, successful and sustainable business for the foreseeable future.

This article originally appeared on Recode.net.