SBC Workers OK 5-Year Deal, Saving Firm $2 Billion

Employees at SBC Communications Inc. overwhelmingly approved a five-year contract that was reached in late May after a brief walkout in 13 states, including California, union officials said Thursday.

About 60% of SBC’s workforce is covered by the contract, which guarantees the jobs of 100,000 workers and saves the company about $2 billion.

Officials with the Communications Workers of America said 85% of the rank-and-file workers had voted in favor of the deal.

SBC, based in San Antonio, had insisted that it could not afford the union’s demands, but shortly after the four-day strike ended, the company agreed to terms that were close to what the CWA had been seeking. The walkout came after months of negotiations had stalled.

With 2003 sales of $41 billion, SBC is the nation’s second-largest provider of local-phone service, behind Verizon Communications Inc., and is the dominant carrier in California.

But after more than three years of falling sales, SBC has said it wants to slow increases in healthcare and other labor costs. Under the contract, workers will pay more for healthcare.

So-called lump-sum payments to employees and retirees, plus costs to hire outside help during the strike and other related expenses, will increase operating expenses in the second quarter by $250 million to $300 million, SBC said in May.

On average, employees will receive base wage increases of 2.3% a year for five years and lump-sum payments averaging $300 a year.

Workers will make higher co-payments for medical services and prescription drugs, but they will receive $1,000 bonuses to help offset those costs.

On Thursday, SBC shares fell 11 cents to close at $24.14 on the New York Stock Exchange.

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Associated Press and Bloomberg News were used in compiling this report.