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Network Plan, Cost Cuts to Take Center Stage as Sprint Reports Earnings Tuesday

The company is trying to do two very hard things at once: Trim expenses and improve its network.

Asa Mathat for Re/code

Sprint’s ambitious bid to simultaneously cut costs and improve its industry-lagging network is set to be a major topic of discussion Tuesday as the company reports earnings and meets with investors and the media.

In recent days, the company has notified workers that it plans to close four call centers and significantly reduce operations at two other centers. Combined with planned reductions at its Overland Park, Kan., headquarters, the company has made plans to cut roughly 2,500 workers, according to the Kansas City Star. More than 500 jobs are being cut at the head office, the paper said.

A Sprint representative confirmed the call center closures but did not comment on the number of jobs impacted. Sprint CEO Marcelo Claure told Re/code last year that the company’s goal was to make the needed job cuts by Jan. 30. The company is aiming to cut $2.5 billion in costs as part of its effort to return to profitability after years of losses.

But even as it trims costs, Claure and corporate parent SoftBank have been working on a plan to improve Sprint’s network, which Claure wants to be No. 1 or No. 2 in quality in 80 percent of markets within three years. As reported by Re/code earlier this month, the plan will involve, among other things, an effort to rely more heavily on smaller cell sites that, in many cases, can sit on government-controlled property. The company is working with Newport Beach, Calif.-based Mobilitie on part of the new network efforts.

Sprint, sources said, is also keen to reduce the amount of money it pays rivals AT&T and Verizon to carry information from cell towers back to the network.

Analysts and others have raised questions about the effort, noting the risks to performance in going with a more radical and untested network approach. In addition to technical challenges, Sprint also has multi-year contracts with major cell tower operators that limit its ability to reduce the number of existing cell sites. Rather, some analysts believe the bulk of Sprint’s efforts are around how it expands its network going forward as opposed to changing the infrastructure already in place.

Sprint has declined to comment specifically on its network plan, but is expected to talk more about its network during separate calls Tuesday, first with investors and then with the media. Sprint moved up its earnings announcement, which was originally scheduled for next week.

The company has been touting recent improvements to its current network. In a blog post on Monday, Sprint said that its LTE Plus network (which combines Sprint’s holdings in three different bands of airwaves) allows it to deliver faster download speeds than any other rival in some markets. Historically, Sprint has badly trailed AT&T and Verizon and, in recent years, even T-Mobile on various network performance metrics.

As for the call center closures, Sprint is shuttering facilities in Rio Rancho, N.M.; Bristol, Tenn.; Temple, Texas; and Hampton, Va., while scaling back customer care efforts in Denver and Overland Park.

Sprint has also said it will look to trim expenses in other ways, including shifting the upfront cost of purchasing devices to another SoftBank-controlled company, which will then lease them to Sprint, which in turn leases the devices to consumers.

Investors will also be watching to see how Sprint has been faring in the ongoing battle for smartphone customers. Claure has placed a big focus on stemming years of defections, and last quarter the company added 237,000 postpaid customers, though the bulk of those gains came from converting people who had been getting cellphone service from Boost Mobile and Virgin Mobile, Sprint’s main prepaid brands.

Claure has said that gaining customers remains a priority, with ending years of losses next on his to-do list.

“That’s the next big task; that hasn’t happened in 11 years,” Claure told Re/code in November.

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