MCI to Slash About 2,000 Jobs, 4 Percent of Workforce

Long-distance telephone company MCI Inc. (MCI) said Friday it was cutting about 2,000 jobs, or roughly 4 percent of its work force, as it struggles to lower costs in the midst of a price war with AT&T Corp. and dominant local telephone companies.

The move brings the total number of job cuts announced by MCI this year to 15,200, or about 28 percent of its employees. Most of the new round of cuts will come from closing customer telemarketing centers in Colorado and Kansas, with additional cuts at centers in South Carolina and Iowa.

MCI's move followed AT&T Corp.'s (T) announcement on Wednesday it was cutting its earnings and sales outlook for the year, citing pricing pressures and its decision to stop adding residential customers in seven states.

The two, along with Sprint Corp. (FON), have been fighting a price war in the long-distance market with the dominant local phone companies, who have lured millions of residential customers and have set their sights on profitable business clients.

That strategy has forced AT&T and MCI to lower prices to hold onto customers, hurting revenues. AT&T's revised outlook now calls for a 12 percent to 15 percent drop in its revenues. MCI's forecasts call for a roughly 9 percent to 14 percent revenue decline, excluding results from the stake in Brazilian telecommunications firm Embratel.

MCI had said it wanted to reduce selling, general and administrative expenses by 8 percent to 10 percent in 2004.

AT&T and MCI have also been hit by the Bush administration's decision to let federal rules allowing cheap access to the networks of dominant local phone companies lapse. Those rules had allowed both companies to offer local phone service, and each had used the rules to add customers by bundling local and long-distance access.