Despite announcing better than expected fourth quarter earnings on Monday, AT&T said it will axe at least 15,000 jobs.
The move is part of a cost cutting drive designed to streamline the company to win back business in its fiercely competitive home market, and expand in new areas such as the deregulated Europe.
Between 15,000 and 18,000 jobs will go, according to company officials - mainly at managerial level. AT&T hopes to encourage voluntary redundancy by offering a one-off early retirement programme, boosting pensions by up to 20 per cent. The company estimates that around 10,000 managers will opt for this scheme.
AT&T?s new chairman, Michael Armstrong, said he aims to cut sales and administrative costs by seven per cent - between $3 billion and $5 billion.
News of the job cuts come on a day of mixed fourth quarter results for the telecomms giant. AT&T posted fourth quarter earnings of $1.32 billion or 81 cents per share, up six per cent on last year and beating the Wall Street consensus of 71 cents.
However, overall revenue fell slightly to $12.83 billion from $12.87 billion one year ago. The shortfall was partly down to a seven per cent fall in revenue from long distance calls.
Although still the market leader in the US telco market, AT&T faces stiff competition from a growing band of local carriers. Plus, in the national market, it will have to deal with the soon-to-be merged MCI and Worldcom - currently numbers two and five in the market.
AT&T will be keen to extend its presence in the recently deregulated European market, according to John Matthews, a consultant at Ovum.
?They already have a relationship with European carriers in the [worldwide] Unisource alliance," he said. ?Although with monopoly regulations it?s unlikely that they?ll try to partner one of the larger incumbents like BT. They?re more likely to go for one of the smaller carriers like Belgacom in the Belgium market.?
A UK spokesperson for AT&T said: ?We?ll mainly be targeting multinationals in the four main markets in Europe - France, the UK, Germany and Italy.?
He denied that a fully deregulated European market would drain AT&T?s market share, as in the US. ?In Europe, AT&T is operating as a smaller player. We?re not on the scale of BT. So we see deregulation as an opportunity to expand our business as long as it?s regulated properly,? he said.
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