Earlier this week, Verizon confirmed that it offered a voluntary severance package (VSP) to about 44,000 employees and that it will transfer over 2,500 IT staff - some rumors suggest the figure to be closer to 5,000 employees - to India-based Infosys as part of a $700 million outsourcing deal.

The layoffs and transfers will impact more than 30% of Verizon's 153,100-employee workforce - as of the end of June - and are part of a 4-year plan to save the largest U.S. wireless carrier $10 billion by 2021.

Verizon's severance package mostly targets long-time employees - with more than 30 years at the company - and is also more generous than for its last round of buyouts, 13 years ago, giving employees 3 weeks of pay for every year worked at the company, capped at 60 weeks.

However, the severance offer excludes employees who are being 'rebadged' to Infosys and offered a 1-year retainer at the Indian company, most likely to train their replacements.

Atherton Research's Take

Verizon's decision to trim 1/3 of its workforce before the start of the holiday season is both sad and shortsighted - something that will come back to haunt it.

But with a total debt of more than $114 billion, the carrier has limited flexibility to reach a healthy balance sheet while investing billions in capital expenditures (CapEx) to deploy its next-generation 5G Ultra Wideband network and 5G broadband Internet service, and pay higher dividends to shareholders: The 3 pillars (debt reduction, CapEx, dividends) of the company's strategy under new CEO Hans Vestberg.

In its June quarter, Verizon paid a total of about $2.4 billion in dividends, up more than 2% year on year.

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