Sprint Nextel is shedding 8,000 jobs in the next three months as the struggling wireless and wireline carrier tries to weather the recession, the company said today. The cuts—which will affect 14 percent of the company’s 60,000-person workforce—are expected to be completed by the end of March with the aim of saving the company $1.2 billion in annual labor costs. The U.S.‘s number-three carrier said it was also suspending pay increases and matching contributions to retirement funds as part of its cost-savings effort. The company said it would incur a charge in excess of $300 million for severance and related costs in the first quarter. Last year, Sprint got rid of 800 jobs in a voluntary buyout plan. In December, larger rival *AT&T* said it was eliminating 12,000 of its employees.

Sprint has been struggling to turn itself around ever since subscribers began to flee following its merger with Nextel. It says it has gotten better at offering its customers a better service, including better customer support and more competitive tariffs such as its $99 flat rate Simply Everything plan. But its Q3 earnings last November in which the company posted a $326 million loss told a troubling story. Customer defections were on the rise again, as its former users jumped to other carriers. Analysts have questioned if Sprint can actually stop the customer exodus in the face of its larger rivals AT&T (NYSE: T) and Verizon (NYSE: VZ). The U.S. market has reached saturation point and most of the new customers a carrier signs up comes from a competitor, making it all the more difficult to capture those users. AT&T has gotten quite a lift with the iPhone, while Verizon has a better reputation for its network than Sprint (NYSE: S). 

Update: In a regulatory filing, Sprint said one of its first executives to be let go is Kathy Walker, chief information and network officer. She will be terminated without cause effective March 31.

• AT&T Cutting 12,000 Jobs, But Plans To Staff Up In Wireless