Sprint Nextel said Monday it will lay off between 2,000 and 2,500 employees and trim external labor and contractor costs in cost cutting measures that are designed to save $350million.

The third largest U.S. mobile phone service provider has lost subscribers in several consecutive quarters, although the number of defections has been declining each quarter. Sprint Nextel shed 545,000 net subscribers in its recently-reported third quarter.

The company said it has discontinued the use of 27 call centers because of customer service improvements. The company added that customer call volume has decreased "in the wake of service improvements." Sprint Nextel has historically fared poorly in independent consumer polls when compared with its competitors.

"The labor cost reductions are the latest action in the company's efforts to make its cost structure more competitive in the industry and to remain financially secure in a challenging economic environment," the company said in a release. Spring Nextel noted that it had a balance of $5.9 billion in cash, cash equivalents, and short-term investments at the end of the third quarter. The layoffs represent 6% of Sprint's 42,000 employee work force.

The company hasn't had a big "hit" mobile phone and has suffered against AT&T with its iPhone and Verizon Wireless with its wide network coverage. Sprint has been betting heavily on its 51% ownership of Clearwire, which has been rolling out its high-speed WiMax network nationally.

Sprint shed another 6,000 employees who moved to Ericsson when the latter firm took over the management of its network infrastructure.

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