This was a quiet week with modest changes among any of the Fab Five (+$114 billion, 4 of 5 higher) or Telco Top Five (-$6 billion, 2 of 5 higher) groups. Apple led the Fab Five with a $72 billion gain (Microsoft second at $45 billion). There were no material winners or losers in the Telco Top Five.

The big news this week was T-Mobile’s announcement of a 7% reduction in their workforce (link to CEO Mike Sievert’s letter to all employees is here). We have noted in several Briefs that AT&T’s reductions over the last 18-24 months have far outpaced the combined Sprint/ T-Mobile levels, so a 7% reduction is not extremely surprising. Also, given the progress T-Mobile described on their most recent earnings call with their billing conversion it’s not surprising that some of the legacy Sprint billing group would be headed for the exits.

This statement from the letter, however, has generated the most discussion:

“What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago. We’ve been out-running this trend by accelerating merger synergies, and building our high-speed Internet business faster than expected, and out-performing in a few other areas. However, it is clear that doing everything we are doing and just doing it faster is not enough to deliver on these changing customer expectations going forward.”

Many analysts have interpreted these statements to mean that T-Mobile’s long-term value proposition is in question. We aren’t quite as negative, but find it to be a rare and intriguing admission nonetheless. We do not think that this deters T-Mobile from rural expansion (which may cost more than expected but is making meaningful market share strides) or from robust capital spending for the remainder of this year and next. It may indicate a more expensive iPhone price than expected (?) or an aggressive switching program focused on AT&T. It also could be a simple Sprint synergy tactic focused on corporate and IT organizations (why the company didn’t state this clearly if that were the case is unclear).

We will be publishing a full Labor Day brief (likely Saturday) which will be focused on what is driving value creation at T-Mobile and Comcast. No doubt that one of those drivers is making an aggressive workforce reduction when necessary is one of them.

File below. More in next week’s Brief.