AT&T: BellSouth Deal Would Lead to 10,000 Job Cuts

AT&T Inc. (T) plans to cut up to 10,000 jobs, mostly through attrition, if its $67 billion purchase of BellSouth Corp. (BLS) goes through, AT&T's chief financial officer said Monday.

The work force reduction would take place over three years, AT&T's Rick Lindner said on a conference call. The acquisition is expected to close next year.

Before the cuts, the combined company would have around 317,000 employees, including Cingular Wireless LLC, which is now a joint AT&T-BellSouth venture.

The 10,000 planned cuts are in addition to the 26,000 job cuts AT&T has already announced — 13,000 due to SBC's acquisition of AT&T Corp., which closed in November, and 13,000 due to "operational initiatives." The combined SBC-AT&T took the name AT&T Inc.

San Antonio-based AT&T expects the acquisition announced Sunday to save it $2 billion annually, partly by combining the two work forces.

More savings from the proposed acquisition would come from reduced advertising expenses and combining the backbone network and information-technology operations of the companies.

The purchase of Atlanta-based BellSouth would give AT&T total control of Cingular, the nation's largest cell-phone provider, and BellSouth's nine-state network.

AT&T is paying 1.325 of its own shares for each BellSouth share. Based of Friday's closing price of $27.99 for AT&T shares, that works out to be $37.09 for each BellSouth share, an 18 percent premium from the Friday closing price of $31.46 for the company.

BellSouth shares surged $3.76, or 12 percent, to $35.22 in midday trading Monday on the New York Stock Exchange. Shares of AT&T slipped 30 cents, or 1.1 percent, to $27.69.

The merged company would have 70 million local-line phone customers, 54.1 million wireless subscribers and nearly 10 million broadband subscribers in the 22 states where they now operate.

The deal would substantially expand the reach of AT&T, already the country's largest telecommunications company by the number of customers served. BellSouth is the dominant local telephone provider in the Southeast.