AT&T-BellSouth merger to disconnect 10,000 jobs

NEW YORK — One way AT&T hopes its $67 billion proposed merger with BellSouth will pay off is by allowing it to get rid of redundant operations.

That means up to 10,000 job cuts over three years, mostly through normal attrition rather than layoffs, AT&T Chief Financial Officer Rick Lindner said Monday.

The deal would form the nation's largest phone company by any measure. It would have nearly half of all lines and be the largest cellphone carrier and the largest provider of broadband Internet service.

Because the merger would effectively unite three companies — AT&T, BellSouth and their joint venture, Cingular Wireless — executives expect plenty of overlapping functions can be eliminated.

Before the cuts, the combined company would have around 317,000 employees, including Cingular.

The 10,000 planned cuts are in addition to the 26,000 job cuts AT&T has already announced — 13,000 due to SBC's purchase of AT&T Corp., which closed in November; and 13,000 due to shifting operations. The combined SBC-AT&T took the name AT&T Inc.

At the Communications Workers of America, which would have about 200,000 workers at the combined company, spokeswoman Candice Johnson said the merger would be a "good opportunity for job growth" as the company expands into new technologies.

"We're not looking for job losses at all," Johnson said.

The union has not yet endorsed the merger. But several of the nation's largest consumer groups said Monday they would oppose AT&T's purchase of BellSouth, arguing that the deal will reduce competition and drive up prices in the telecommunications industry.

David Kaut, a telecom regulatory analyst at the financial services firm Stifel Nicolaus, said the merger would likely gain approval with modest conditions, such as divestitures of business lines in overlapping territories.

Regulators are likely to buy the telephone companies' argument that other technologies will provide sufficient competition, Merrill Lynch analyst David Janazzo wrote in a research report.

Telephone companies are losing a small percentage of their phone customers every year to cable, Internet and wireless telephony.

Consumers Union and the Consumer Federation of America said they would urge the Justice Department to block AT&T's $67 billion offer.

The consumer groups also asked their members to contact the Federal Communications Commission and to petition their congressional lawmakers to try to prevent the deal from going through.

The consumer groups warned that increasing consolidation in the telephone industry would boost the prices for local, long-distance and cellphone services.

They added that more-limited choices for phone service, along with a similar merger trend in the cable industry, threatened to reduce the variety of broadband Internet services available.

"If approved, this merger will lead to higher local, long-distance and cellphone prices for consumers across the country," said Gene Kimmelman, a vice president of Yonkers, N.Y.-based Consumers Union.

Mark Cooper, research director for the Consumer Federation of America in Washington, D.C., said people should worry that consolidation in both the telephone and cable industries is compromising the promise of broadband Internet technologies.

"We've been through a series of mergers that have reconstructed most of the old Ma Bell system," Cooper said, referring to the historic 1984 government breakup of the old AT&T monopoly into seven Baby Bell telephone providers.

The phone companies have argued they face growing competition from cable companies, which have been entering the phone market and offering broadband services, such as high-speed Internet access.

Randall Stephenson, AT&T's chief operating officer, told analysts Monday that AT&T already was feeling competitive pressure and that it has to tailor its prices to reflect those of local cable companies.

But Cooper said consolidation in both industries meant "that when consumers wake up in the morning, they have two choices for a full-service broadband network, telephone and cable."

He called it "an unregulated duopoly," adding "Every consumer knows that two is not enough for real competition."

Associated Press reporters Jennifer C. Kerr in Washington, Eileen Alt Powell in New York and Errin Haines in Atlanta contributed to this report.