Crown Castle cuts jobs as telcos slash spending

Crown Castle this week revealed that it will shed around 15% of its workforce as part of a restructuring effort that is closely linked to reduced spending by telecoms companies.

The job losses will amount to around 750 staff, based on the fact that Crown Castle says it employs circa 5,000 people.

The passive infrastructure specialist said that as well as cutting jobs it will discontinue its installation services, which it currently has a product offering within its towers segment. However, it will continue to offer site development services on its towers. The move will also enable it to consolidate office space.

The plan should help Crown Castle “to reduce costs to better align the Company’s operational needs with lower tower activity,” it said, as discussed in its second quarter results announcement published last week.

Indeed, the industry was almost waiting for an announcement of this sort from the company on the back of that results presentation, in which the company revised down its full-year expectations for earnings and net profit.

Crown Castle’s numbers were solid for the three months to the end of June. Site rental revenues grew by 10% year-on-year to US$1.73 billion, while adjusted EBITDA was up by the same amount to $1.19 billion, and the firm’s bottom line expanded by 8% to $455 million.

But there are some difficulties ahead.

“We delivered second quarter results in line with our expectations and continue to be excited by the long-term opportunity ahead with the majority of the 5G deployment in the U.S. still to come,” said Crown Castle CEO Jay Brown, in a statement accompanying the numbers.

“As the carriers have reduced network spending, we anticipate lower tower activity for the remainder of this year, resulting in lower contribution from services and a decrease to our full year 2023 outlook,” Brown said. “Due to the long-term leasing agreements we have entered into with our customers, this reduction in tower activity is expected to have little impact on our site rental revenues.”

The restructuring plan is, therefore, a logical next step.

It will cost Crown Castle $120 million in restructuring charges, most if which will come in the third and fourth quarters. $70 million of that will be severance costs and similar, plus $50 million linked to office space consolidation.

Crown Castle says it will carry out the headcount reduction and the discontinuation of towers installation services during the current quarter, but it will still carry out some installation services beyond the end of September to fulfil some existing contracts. Reducing office space will take until the end of the year, and some lease obligations will carry on beyond that date.

Crown Castle is not the only big name in the telecoms space to be shedding staff. One of its customers, Verizon, announced it had moved to “rationalise its workforce” in its latest quarterly results announcement, Light Reading reported earlier this week, also namechecking Cisco, Dish Network and Ericsson as companies wielding the axe. On this side of the pond there have also been high-profile staffing reduction announcements from Virgin Media O2, BT and Vodafone in recent weeks. And there have been many others across the industry, including from the tech giants.

It’s a sign of the times and a further indication that while the passive infrastructure space still comes with a sizeable growth opportunity, it now comes with many challenges. The economic situation, the rising cost of labour and of capital, and – of course – lower spending from telco customers are all taking their toll.

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