AT&T to shed 4,700 jobs as part of $6B savings plan, says labor union

AT&T is to cut more than 3,400 technical and administrative jobs and permanently close about 250 shops employing 1,300 people, according to a trade union, piling further misery onto a US telecom workforce that has already witnessed thousands of job cuts in the last few years.

The US operator's plans were apparently disclosed to the Communications Workers of America (CWA), which slammed the move in a public statement and said the layoffs would add to the "pain of the recession already underway."

AT&T subsequently confirmed to Light Reading there would "targeted but sizeable reductions" across the workforce as part of cost-cutting activities.

"Reducing our workforce is a difficult decision that we don't take lightly," said a spokesperson in emailed comments. "With more customers shopping online, we are closing some retail stores to reflect our customers' shopping practices. While these plans are not new, they have been accelerated by the COVID-19 pandemic."

In April, AT&T announced plans for a major cost-cutting program designed to save about $6 billion by 2023, including $1.5 billion in labor expenses – about 4% of total labor costs.

If cuts were spread evenly across all salary bands, that would imply about 10,000 layoffs, a much higher number of job losses than the CWA's figure.

Cuts of that magnitude would come as little surprise, however: AT&T slashed about 3,310 jobs in the first three months of the year its accounts show, and its workforce has continued to shrink by thousands every quarter for the last couple of years.

Data compiled by Light Reading shows staff numbers have fallen by around 35,500 since the end of 2017, when AT&T had about 280,000 employees including staff at Time Warner, the media giant it had agreed to buy in an $85 billion deal.

Excluding takeover activity, the CWA puts the cumulative number of job cuts at 41,128 over the last nine quarters.

A decision to cut about 4,700 technical, administrative and retail jobs would affect around 2% of AT&T's workforce at the end of March, when financial statements showed there were 244,490 employees at the firm.

The CWA reacted angrily in last night's statement. "If we are in a war to keep our economy going during this crisis, why is AT&T dismissing the troops?" said Chris Shelton, the CWA's president.

"AT&T could help lead the country toward recovery by partnering with its workforce to build next-generation networks. Instead the company is adding to the pain of the recession already underway."

Joe Snyder, another CWA representative and AT&T technician, accused his employer of pushing work to "low-paid contractors who do not have the same training, experience and commitment as CWA members."

The CWA went on to say AT&T had reneged on its promise to create 7,000 jobs using tax windfalls from the Tax Cut and Jobs Act that came into force in 2018.

It has repeatedly complained that AT&T's strategy is being steered by "vulture" hedge fund Elliott Management, which bought a small stake in the operator last year. The CWA claims Elliott has pushed AT&T to eliminate jobs and force up the share price through stock buybacks.

AT&T's share price rose 30% in 2019, finishing the year at $39.06 on the New York Stock Exchange, but those gains have been almost entirely eroded this year amid the coronavirus pandemic, with the stock closing at $30.78 yesterday.

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The program of job cuts, however, has given a significant boost to productivity measured on the basis of revenues per employee, a metric that is attracting investor attention as companies automate tasks and "digitalize" their operations.

AT&T made just $573,214 in sales per employee in 2017, but the figure was up to $731,207 last year, buoyed by rising sales and a fall in staff numbers.

Operating profits at the company rose 7% last year, to nearly $28 billion.

Job cuts on the retail side have been happening as customers make purchases online instead of in physical stores, a habit that could become entrenched during the current pandemic.

Other customer service roles have been affected by investment in "chatbots," artificially intelligent messaging and voice systems that can already handle many of the queries traditionally assigned to a customer service assistant.

Technical jobs are also disappearing with the rollout of more advanced network technologies, operators have acknowledged.

UK-based Vodafone has already cut hundreds of jobs at its network operations centers as it rolls out more heavily automated, "zero-touch" systems.

"Five to seven years from now, there will be a very small number of people that run the NOC infrastructure," said Scott Petty, Vodafone UK's chief technology officer, in late 2019. "The way we run networks is fundamentally changing."

In the US market, other telcos have also been slashing jobs in recent years. Verizon, AT&T's biggest rival, has cut 42,700 roles since the end of 2015, according to filings with the US Securities and Exchange Commission. Headcount at CenturyLink, a major player in the market for business services, has fallen by 8,500 employees – about 17% of the total – since late 2017.

News about redundancy plans by AT&T is a further worry for telecom-sector employees this week, after T-Mobile US warned that some jobs would disappear following its recent merger with Sprint in a process of "workforce evolution."

In a statement that came in response to media reports about layoffs, T-Mobile said it would create 5,000 new jobs in some areas, but that other employees would be "supported in their efforts to find a new position outside the company."

T-Mobile currently employs about 80,000 people including staff at Sprint, the operator recently confirmed to Light Reading. The CWA reckons about 30,000 jobs are at risk from the merger.

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— Iain Morris, International Editor, Light Reading