AT&T will cut more than 20% of its workforce this year, ratcheting up its planned layoffs from a previously estimated target of 8%, the long-distance telecommunications carrier announced on Thursday.
It also will take a non-cash charge of about US$11.4 billion in the third quarter to reflect a decrease in the value of the company's assets, the company said in a statement. AT&T blamed the asset impairment on pricing pressure, changes in the regulatory environment and the move toward new technologies in the business market.
In July, after reporting a drop in net income in the second quarter, AT&T announced it would stop marketing consumer long-distance services. That move, along with other corporate change initiatives, led to the increased workforce cuts, the company said Thursday. About three-quarters of the employees affected this year have already departed or been notified, the statement said. In the third quarter, AT&T will record a restructuring charge of approximately $1.1 billion for the cutbacks.
On the bright side, AT&T expects to finish the year with net debt of less than $7 billion, representing a cut of almost 50% over the past two years, it said. In addition, job cuts and other cost-cutting efforts are helping profitability, the company said.
AT&T, along with other long-distance carriers, has been slammed by falling prices over the past few years. Regulatory changes have also hurt, the company has said. When AT&T announced its retreat from consumer long-distance in July, it said US Federal Communications Commission rules protect incumbent local carriers by allowing them to offer bundles of local, long-distance and broadband services, putting AT&T at a disadvantage.