AT&T has slashed some of its 2004 forecasts, citing pricing pressure from increased competition and losses due to a recent US regulatory decision on local access rates.
It also said it was accelerating its VoIP (voice over Internet Protocol) roll out, expanding the offering to 12 US cities this month as well as beginning teleworker trials for US-based multinational business customers to use its CallVantage VoIP offering in Australia, Hong Kong, Singapore and the UK.
The company said that with a recent escalation in pricing pressure it now expected a sequential increase in its year-over-year revenue decline for the second-quarter of 2004 for AT&T Business.
It also expected a "high-teens" rate of decline in its AT&T Consumer segment for 2004 compared with the previous year because of a regulatory decision on local access rates that caused it to cut back on its customer acquisition programmes.
AT&T now expects total revenue of between $29.5bn (£16bn) and $30.5bn for 2004.
Earlier this year an appeals court ordered an end to portions of a federal policy designed to give telecommunications competitors access to the local networks. AT&T has argued that a stoppage of the network-sharing rules will lead to higher prices.
AT&T's 2004 financial revisions may serve as another sign of the changing market telecommunications providers face, where they are under increasing pressure to adopt new technologies and at the same time keep prices down.
AT&T said that it is pushing forward with an aggressive cost-cutting plan to meet competitive goals and that it has already exceeded a previously announced 8% head-count reduction for 2004, which is expected to result in a $70m charge for the second quarter.
Representatives for the company were not available to confirm how many employees had been laid off.
Scarlet Pruitt writes for IDG News Service