GTE Corp. to Cut 17,000 Jobs Over the Next Three Years : Communications: Phone company says move will result in a $1.8-billion restructuring charge for fourth quarter.
In the latest of a string of cutbacks that reflect a painful metamorphosis in the telecommunications industry, GTE Corp. announced Thursday that it will reduce the work force of its telephone operations by 23%, or 17,000 jobs, over the next three years.
The Stamford, Conn.-based company said the restructuring will result in a $1.8-billion pretax charge in the fourth quarter that ended Dec. 31.
GTE’s move brings to 136,595 the number of jobs that local phone providers have either already cut or have proposed cutting since 1990. Just last week, Pacific Bell announced plans to cut 10,000 jobs over four years.
Analysts say these cuts could be a harbinger of more to come as competition intensifies and new technology makes it possible to offer more services with fewer people.
GTE is California’s second-largest phone company, with 3.1 million customers mostly in Southern California, but it remained unclear how many jobs will be lost in the state.
GTE California’s announcement earlier this week of a plan to cut 500 employees is included in the 17,000 number. In the past three years, GTE California has been proportionately harder hit by cutbacks, losing a third of its work force, compared to a 16% employment decline for the company as a whole.
Worldwide, GTE employs 130,000. A growing proportion of GTE’s jobs are in Dallas, where the company’s telephone operations are based, a spokesman said.
Like the regional Bell operating companies, GTE faces increased competition in local telephone markets from cable companies and long-distance carriers such as MCI Communications Corp. Advanced telephone switches and high-capacity fiber-optic wiring are making it less costly to offer local telephone services, while regulatory authorities are lowering barriers to encourage competition.
The California Public Utilities Commission is soon expected to open up the short-haul toll business, which affects local calls not covered by basic services. By the end of the year, only 30% of GTE California’s revenue will be in markets where it has a monopoly, down from 70% today, said Mike Murray, a GTE spokesman.
GTE said $680 million of its charge against earnings will go toward upgrading or replacing customer service and administrative systems to offer better service with fewer people.
“This plan reflects our intention to provide the best customer service in the industry,” GTE Chairman Charles Lee said in a statement. “It is a critical part of our strategy to position GTE for the emerging opportunities in telecommunications.”
The company will cut the number of customer contact centers from 171 to 11. It will also consolidate its five billing centers into one.
Increased computer capacity has made it possible for a single customer representative to handle a wide range of queries from billing to repairs, Murray said. Customers with existing jacks will now be able to have their services activated by phone without a visit from a GTE service representative.
GTE said it will manage and monitor its entire national network of 17 million access lines from one control center. The job is currently spread across 19 regional centers.
Job cuts will be made across the board and will include management and service representatives. Employees, who have watched GTE steadily shrink its operations over the past decade, seem to be taking the announcement in stride.
“We’ve been going through this for quite a few years,” said a GTE employee in personnel. “If it’s not called this (restructuring), it’s called something else. You learn to live with it.”
GTE said the charge will reduce its net income by $1.2 billion, or $1.22 a share, in the fourth quarter, but that it will ultimately result in annual savings of about $1 billion.
GTE’s stock closed Thursday at $34.625, down 25 cents on the New York Stock Exchange.
Phone Company Job Reductions
Job reductions at telephone companies offering local service:
Cuts since Proposed Company 1990 cuts Bell Atlantic 9,000 -- Pacific Telesis 5,500 10,000 Ameritech 9,200 -- BellSouth 3,800 10,200 Southwestern Bell 7,010 1,500 U.S. West 4,000 9,000 Nynex 14,375 up to 22,000 GTE 14,000 17,000
Sources: Los Angeles Times, Bloomberg Business News
