Following a challenging integration of the wireline properties it acquired from Verizon, Frontier is going to lay off 1,000 employees as part of what it says is a broader customer-focused reorganization effort.
Dan McCarthy, CEO of Frontier, laid out his plans in an e-mail that was obtained by Broadband Reports, telling employees that the layoffs are part of a broader effort to rein in costs following multiple years of integrating assets it acquired from Verizon and AT&T in various states.
“Beginning this week, we will be speaking with employees and teams who are directly impacted by this decision,” McCarthy said. “These changes will unfortunately impact the positions of approximately 1,000 of our colleagues at all levels of the company – colleagues who have made significant contributions to the success of Frontier. This is a difficult decision, but it is a necessary step.”
News of the layoffs should not be much of a big surprise as McCarthy told investors during its third quarter earnings call that the telco has realigned sales, marketing and commercial product management under a single leader, which will report directly to him.
He said that the new structure will not only produce “cost savings,” but give Frontier, which has traditionally been a consumer-oriented telco, an “enhanced focus on commercial.”
This organizational structure and new Commercial and Consumer business units will result in enhanced focus on the commercial segment and more efficient capital allocation. Current regional support functions including Engineering, Finance, Human Resources, Communications and Marketing are being centralized to achieve improved operational performance as well as expense reductions.
The SVPs of Operations for the newly created operating areas will report to Ken Arndt, who will be joining Frontier’s senior leadership team as the EVP of customer operations. Arndt will succeed John Lass, who has announced his intention to retire in 2017.
Frontier will also create a centralized Commercial Sales team, which will be lead by Lass on an interim basis and will continue reporting directly to McCarthy.
McCarthy said that “Growing commercial revenue from Medium-Sized and Enterprise customers is a critical focus and I am confident that this new structure will improve our ability to deliver solid results.”
Meanwhile, Cecilia McKenney will oversee the centralized sales team focusing on Consumer and Small Business. McCarthy said that the Field Marketing organization will report to Cecilia and she will continue to have responsibility for Frontier’s alternate channels and customer care functions.
This round of job cuts come at a time when Frontier is starting a new chapter. After acquiring multiple wireline properties from Verizon and AT&T since 2009, an action that required integration and capital spending, the service provider is reallocating its attention on operations.
Part of this change was seen when Frontier named Perley McBride as its new CFO in September, replacing John Jureller who helped lead the company through its aggressive acquisition period. McBride, who returned to Frontier following stints at Cable, Wireless and Leap Wireless, is known for his cost cutting and operational capabilities.
Financial analysts agreed with this thesis. UBS said in a research note that “we believe this move coincides with management's shifting focus to operations and cost cutting, aligning well with McBride's track record and familiarity with the business.”