AT&T; to Cut Jobs to Pare Expenses

AT&T; Corp. said Monday that it will take $1.5 billion in charges as it cuts about 3,500 jobs, about 5% of its workforce, and writes down the value of some Latin American and high-speed Internet assets.

The job cuts come as the biggest U.S. long-distance phone company continues to pare expenses to offset shrinking revenue and increasing competition.

In the third quarter, AT&T;’s total revenue fell 8.3% to $12 billion.

The company faces a fresh bout of competition as its offspring, the Baby Bell companies created by the 1984 breakup of AT&T;, enter the long-distance market.

At the same time, the long-distance market suffers from a glut of network capacity and slack demand from corporate customers in the weak economy.

More than half of the job cuts will come from management, and most of those executives will leave in the first half of the year. AT&T; attributed the job cuts to improved processes and automation in services for business customers.

The cuts “reflect ongoing cost reduction and downsizing efforts across the industry, given weak demand,” said Merrill Lynch analyst Adam Quinton.

AT&T; also agreed to sell AT&T; Latin America to Southern Cross Group for $1,000 after writing down its investment in the unit by $1.1 billion.

The accord is a non-binding letter of intent, AT&T; said in a filing with the Securities and Exchange Commission.

Shares of New York-based AT&T;, which provides telephone and data services to about 4 million corporate customers and more than 50 million residential customers, shed 18 cents to $27.48 on the New York Stock Exchange.

The layoffs will result in a restructuring charge of $240 million, which will lower fourth-quarter earnings by about 20 cents a share, the company said. Wall Street analysts were expecting AT&T; to earn 66 cents a share for the quarter.

Separately, AT&T; said it will offer high-speed digital subscriber line Internet access through Covad Communications Group Inc., and will take a charge of $200 million to write down its own DSL assets.

AT&T; had acquired assets from Northpoint Communications in 2001, but never broadly rolled out service.

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Bloomberg News contributed to this report.