AT&T to cut 20% of jobs to boost profitability

AT&T will cut more than 20% of its workforce this year, ratcheting up its planned layoffs from a previously estimated target of...

AT&T will cut more than 20% of its workforce this year, ratcheting up its planned layoffs from a previously estimated target of 8%.

The long-distance telecommunications carrier also announced it also will take a non-cash charge of about $11.4bn (£6.4bn) in the third quarter to reflect a decrease in the value of the company's assets.

AT&T blamed the asset impairment on pricing pressure, changes in the regulatory environment and the move toward new technologies in the business market.

In July, after reporting a drop in net income in the second quarter, AT&T announced it would stop marketing consumer long-distance services.

That move, along with other corporate change initiatives, led to the increased workforce cuts, the company said. About three-quarters of the employees affected this year have already left or been notified. In the third quarter, AT&T will record a restructuring charge of approximately $1.1bn for the cutbacks.

However, AT&T expects to finish the year with net debt of less than $7bn, representing a cut of almost half over the past two years. In addition, job cuts and other cost-cutting are helping profitability, the company said.

AT&T, along with other long-distance carriers, has been slammed by falling prices over the past few years. Regulatory changes also have hurt, the company has said. When AT&T announced its retreat from consumer long-distance in July, it said US Federal Communications Commission rules protect incumbent local carriers by allowing them to offer bundles of local, long-distance and broadband services, putting AT&T at a disadvantage.

Stephen Lawson writes for IDG News Service

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