Jones Lang LaSalle
AT&T plans to eliminate 10,000 jobs
Bell South merger to bring more cuts
Tuesday, March 07, 2006
BY TOM JOHNSON
Star-Ledger Staff
The latest merger involving AT&T will cost 10,000 workers their jobs during the next three years and could hurt some telecommunications-equipment vendors.
San Antonio- based AT&T, which announced Sunday it would buy BellSouth for $67 billion, said it expects to reduce its work force primarily through the normal course of retirements and departures. With a work force totaling more than 317,000, the reduction is not very significant, said Randall Stephenson, the chief operating officer told analysts in a conference call.
"We're pretty confident we can affect that largely through attrition," he said.
The latest deal comes on the heels of SBC Communications' acquisition last November of the old AT&T, formerly based in Bedminster. SBC Communications executives, who subsequently chose to take on the fabled brand name, won't change the company's previously announced plans to eliminate 26,000 jobs as a result of last fall's transaction.
The company employs about 8,700 people in New Jersey. The company declined to say how many of the latest round of jobs reductions would take place in New Jersey.
AT&T, which will assume full control of Cingular Wireless, the nation's largest cell-phone provider, upon completion of the deal, said it expects the acquisition will result in $2 billion worth of savings in 2008 and $3 billion the following year.
About one-third of the savings are expected to come from reduced labor costs and consolidation of support functions and corporate staff. Additional savings will come from reduced advertising costs.
The deal positions AT&T as the nation's largest telecommunications company at a time when the industry is vying with cable television companies to offer television programming, high-speed Internet service and phone service to consumers.
The acquisition effectively merges three companies -- AT&T, BellSouth and Cingular Wireless. Analysts said the merger could result in a short-term freeze in capital spending, which could hurt some telecom equipment vendors, although others, such as Alcatel, could benefit. Alcatel is the primary vendor in building the company's next-generation communications network.
Joe Chiasson, a telecommunications analyst at Susquehanna Financial Group, said the equipment vendors could face a "cold dose of reality" because mergers tend to delay spending as some network plans are put on hold until completion of the deal.
In a research note to clients, Chiasson said Redback, Tellabs and Murray Hill-based Lucent Technologies stand out as likely losers, given that they all derive a material percentage of their revenue stream from BellSouth.
But Inder Singh, an analyst at Prudential Equity Group, said during the long term, the deal will be positive for the equipment vendors because the combined company will offer a "better-defined network upgrade road map."
Tom Johnson may be reached at tjohnson@starledger.com or (973) 392-5972.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
AT&T plans to eliminate 10,000 jobs
Bell South merger to bring more cuts
Tuesday, March 07, 2006
BY TOM JOHNSON
Star-Ledger Staff
The latest merger involving AT&T will cost 10,000 workers their jobs during the next three years and could hurt some telecommunications-equipment vendors.
San Antonio- based AT&T, which announced Sunday it would buy BellSouth for $67 billion, said it expects to reduce its work force primarily through the normal course of retirements and departures. With a work force totaling more than 317,000, the reduction is not very significant, said Randall Stephenson, the chief operating officer told analysts in a conference call.
"We're pretty confident we can affect that largely through attrition," he said.
The latest deal comes on the heels of SBC Communications' acquisition last November of the old AT&T, formerly based in Bedminster. SBC Communications executives, who subsequently chose to take on the fabled brand name, won't change the company's previously announced plans to eliminate 26,000 jobs as a result of last fall's transaction.
The company employs about 8,700 people in New Jersey. The company declined to say how many of the latest round of jobs reductions would take place in New Jersey.
AT&T, which will assume full control of Cingular Wireless, the nation's largest cell-phone provider, upon completion of the deal, said it expects the acquisition will result in $2 billion worth of savings in 2008 and $3 billion the following year.
About one-third of the savings are expected to come from reduced labor costs and consolidation of support functions and corporate staff. Additional savings will come from reduced advertising costs.
The deal positions AT&T as the nation's largest telecommunications company at a time when the industry is vying with cable television companies to offer television programming, high-speed Internet service and phone service to consumers.
The acquisition effectively merges three companies -- AT&T, BellSouth and Cingular Wireless. Analysts said the merger could result in a short-term freeze in capital spending, which could hurt some telecom equipment vendors, although others, such as Alcatel, could benefit. Alcatel is the primary vendor in building the company's next-generation communications network.
Joe Chiasson, a telecommunications analyst at Susquehanna Financial Group, said the equipment vendors could face a "cold dose of reality" because mergers tend to delay spending as some network plans are put on hold until completion of the deal.
In a research note to clients, Chiasson said Redback, Tellabs and Murray Hill-based Lucent Technologies stand out as likely losers, given that they all derive a material percentage of their revenue stream from BellSouth.
But Inder Singh, an analyst at Prudential Equity Group, said during the long term, the deal will be positive for the equipment vendors because the combined company will offer a "better-defined network upgrade road map."
Tom Johnson may be reached at tjohnson@starledger.com or (973) 392-5972.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 10:02 AM
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