AT&T to cut 12,000 jobs, 4 percent of staff

NEW YORK — AT&T Inc. joined the recession's parade of layoffs Thursday by announcing plans to cut 12,000 jobs, about 4 percent of its work force.

The Dallas-based telecommunications company — the nation's largest — said the job cuts will take place this month and throughout 2009. The company also plans to reduce capital spending next year.

Spokesman Walt Sharp said the layoffs will be "across the company and across the country," but would not specify what departments and cities would be most affected.

The 300,000-person company has announced layoffs several times over the past few years, including in April, when it said it would eliminate 4,600 jobs, but it has been hiring at the same time. This is the first time since the company bought BellSouth Corp. in 2006 that it said overall staffing would decline.

The new cuts come as AT&T finds itself pulled by two currents at once. Not only is the recession leading businesses and consumers to curtail spending, but a long-term trend in the telecom industry is also at play: AT&T, which provides local phone coverage in California, Texas and 20 other states, has been seeing many customers defect from landline phones to wireless services. In the last quarter, AT&T's basic voice lines in service dropped 11 percent. Its wireless customer base, meanwhile, grew 14 percent.

Reflecting that shift, the company said the new layoffs are also the result of its "changing business mix." It still plans some hiring in 2009 in parts of the business that offer cell phone service and broadband Internet access.

The shift away from landlines has accelerated because of the economic turmoil, said Christopher King, an analyst with Stifel Nicolaus. Fewer homes bought means fewer landlines getting installed or transferred. And more are getting disconnected as people look to save money and rely only on their cell phones.

The bulk of AT&T's layoffs, said the analyst, are going to be from the company's landline business. But he added that it wouldn't be surprising if some came from the unit of the company that serves large businesses and accounts for about 30 percent of sales. Companies have been cutting back spending because of the recession, and this, King said, will "certainly pinch" AT&T's revenue growth.