* AT&T lops 7,400 more heads as it exits consumer telephony
AT&T is laying off 7,400 people – more people than planned this year – as it retreats from consumer telephony.
The beleaguered carrier is also writing off more than $11 billion in assets as it continues to transform its network to support next-generation data-optimized applications for business customers.
AT&T will incur an asset impairment charge of $11.4 billion and a workforce restructuring charge of $1.1 billion for the third quarter.
The layoffs are in addition to the 4,900 cuts AT&T announced earlier this year. In all, 12,300 employees will be shown the door this year, or about 20% of the carrier’s workforce.
AT&T announced plans earlier this year to exit consumer telephony after recent court rulings indicated that prices for access to local RBOC facilities were likely to climb. A Washington, D.C., appeals court in March had ordered an end to portions of the FCC’s unbundled network elements platform policy, which established government-mandated rates for wholesaling RBOC local loops.
A string of efforts by competitive local exchange carriers, including AT&T, MCI and Sprint, to overturn the ruling have been blocked, prompting AT&T to exit the consumer local access business.
Speculation that AT&T would announce a significant restructuring surfaced earlier last week when CEO Dave Dorman abruptly canceled a speaking engagement at a Goldman Sachs conference in New York.
Observers believe AT&T is trimming itself down to attract suitors. RBOCs could gain access to a wealth of nationwide enterprise data customers and assets by acquiring AT&T, MCI or Sprint.
The RBOCs have all said they are looking to grow their base of enterprise customers. But at that Goldman Sachs conference, SBC and BellSouth indicated they were not interested in acquiring an IXC at the moment – they are still engineering Cingular’s $41 billion acquisition of AT&T Wireless – and Verizon has its hands full with a possible divestiture of 10 million rural access lines to help fund its FTTP buildout and EV-DO wireless expansion.
AT&T’s exit from consumer telecom is a bittersweet milestone in the carrier’s 130-year history. AT&T was the parent of the Bell System monopoly, earning the nickname “Ma Bell.”
AT&T was forced to divest its local telephone operations by the Department of Justice in 1984, a ruling that created the RBOCs. AT&T then became primarily a long-distance provider leasing back pieces of its former local network from the RBOCs to offer local access service.
