Job cuts planned after AT&T-BellSouth deal

updated 7:39 a.m. ET March 7, 2006

ATLANTA - AT&T Inc. plans to cut up to 10,000 jobs, mostly through normal turnover, if its $67 billion purchase of BellSouth Corp. is approved by shareholders and regulators, AT&T’s chief financial officer said Monday.

The work force reduction would take place over three years, AT&T’s Rick Lindner said. Before the cuts, the combined company would have around 317,000 employees, including Cingular Wireless LLC, which is now an AT&T-BellSouth joint venture.

The new company would be the country’s largest phone company — with nearly half of all lines. It also would be the largest cell-phone carrier and the largest provider of broadband Internet service.

Still, investors and analysts expect it to pass regulatory muster due to the fact that phone companies are facing increasing competition, especially from cable operators.

The acquisition, which was announced Sunday, is expected to close next year.

The 10,000 planned job cuts are in addition to the 26,000 cuts AT&T has already announced — 13,000 due to SBC’s acquisition of AT&T Corp., which closed in November, and 13,000 due to shifting priorities in the business. The combined SBC-AT&T took the name AT&T Inc.

At the Communications Workers of America, which would have about 200,000 workers at the combined company, spokeswoman Candice Johnson said the merger would be a “good opportunity for job growth” as the company expands into new technologies.

“We’re not looking for job losses at all,” Johnson said. The union has not yet endorsed the merger.

San Antonio-based AT&T expects the acquisition to save it $2 billion annually at first, increasing to $3 billion a year by 2010.

Slightly more than one third of the savings would come from reduced labor costs and consolidation of support functions and corporate staff, Lindner said.

The combined company would be based in San Antonio, depriving Atlanta of one of its largest corporate headquarters.

Georgia Gov. Sonny Perdue and Atlanta Mayor Shirley Franklin said Monday they both will fly to Texas soon to try to persuade AT&T’s executives to move their headquarters to Atlanta.

“It’s hard to replace BellSouth,” Franklin said. “They’ve contributed so much over the last decade. We’re anxious for their national headquarters to move here.”

Cingular’s headquarters would remain in Atlanta.

More savings from the proposed acquisition would come from reduced advertising expenses and combining the backbone network and information-technology operations of the companies.

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