AT&T quietly cuts another 2,500 jobsAT&T quietly cuts another 2,500 jobs

America's oldest provider of telecom services continued its zero-touch mission with the quiet elimination of another 2,500 jobs between July and September. AT&T typically ejects tens of thousands of employees annually, and so the latest figure is easy to miss, accounting for just 1.5% of AT&T's 172,400-strong workforce at the end of June.

It represents the continuation of a long-running trend, nevertheless. At some point in the not-too-dim-and-distant future, the human element of AT&T will be its shareholders, its customers and CEO John Stankey or his successor, leaving artificial intelligence to run the network, fix the boxes, sell the phones and fetch the sole remaining employee a morning latte.

For anyone needing a reminder, AT&T's workforce looks like it sustained heavy losses in some recent conflict, shrinking in record time from about 280,000 people at the end of 2017 – including all the Time Warner employees it was then about to welcome with a vampire's charm through its doors – to 169,900 last month. That's a drop of 110,100 in less than five years.

Figure 1: AT&T's headcount (Source: AT&T)

Much of the recent attrition has been caused by AT&T's offloading of various media assets, including the aforementioned Time Warner. Rebranded WarnerMedia, it was so badly mishandled that AT&T had to spin it off and combine it with Discovery, another media company, at the cost of tens of billions. It wasn't the operator's only media blunder, either.

"Instead of doubling down and continuing to make that network the best in the world, they decided to get into other businesses," said David McCourt, the founder of Granahan McCourt Capital, during the Network X show in Amsterdam this week. "They bought DirecTV for $67 billion, lost 10 million subscribers and sold it for $6 billion. They bought Time Warner for $85 billion and sold it four years later for $43 billion. It's not easy to transform a business."

Wielding the guillotine

However, the divestiture of assets is not the reason for the last round of cuts. AT&T had this explanation when asked: "We are always evaluating our workforce based on the needs of our customers. In areas of the business that are growing, we are actively hiring thousands of jobs across the country."

"In legacy areas of the company that aren't growing, we manage our staffing needs accordingly, including things like not backfilling positions for employees who leave," the company said. In other words, as people retire, they are not replaced in the jobs they were doing.

AT&T is certainly not unique in that regard. France's Orange is known to have a similar approach in a part of the world where the metaphorical guillotine is deployed far less readily than the real thing was in the 1790s. "Bullshit jobs" is the name given to this phenomenon by anthropologist David Graeber in a 2018 book – when people are kept on the payroll in the age of extreme automation but fulfill no useful purpose. If proof were needed, it is not refilling roles when staff hobble into the care home.

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It is to be expected at AT&T, which is trying to slash annual operating costs by $6 billion and is determined to make good progress this year. "We continue to have strong visibility on achieving more than $4 billion of our $6 billion transformation cost savings run rate by the end of this year," Stankey said on this week's call about earnings.

He had previously suggested that further automation could be an answer to wage demands triggered by the cost-of-living crisis. "The good news is we're doing a lot of investment in other forms of mechanization and automation in our business," he said when the company reported its second-quarter results earlier in the year. "And some of that investment is helping us keep a lid on some of the wage-related inflation costs."

Investors seemed to like what they saw from AT&T this week, pushing its share price up nearly 8% on October 20, when it reported numbers. But it's worth 43% less than it was at the end of 2017 and still has about $124 billion in long-term debt on its balance sheet, up from $59 billion in 2010. Net income was $20.2 billion that year, ticking up to about $21.5 billion in 2021. Zero-touch probably can't come soon enough.

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— Iain Morris, International Editor, Light Reading