SBC Takeover Will Lead to Losses of Local Telecom Jobs

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The proposed acquisition of AT & T; Corp. by SBC Communications Inc. is almost certain to result in job cuts in Southern California. The questions are when, where and how many.


SBC already has announced that it will slash 13,000 jobs over three years as a result of the planned $16 billion transaction, mostly through attrition. Analysts say they expect SBC to find it needs to cut more.


“There’s a lot of overlap between the two companies, so obviously there is going to be a lot of job cuts,” said Ivan Feinseth, an analyst for Matrix USA LLC. “That’s a big part of the cost savings.”


San Antonio-based SBC employs 10,000 people in Los Angeles out of 163,000 companywide. It has corporate offices in downtown Los Angeles at 1010 Wilshire Blvd., along with other facilities in the area, such as customer call centers and repair centers, and sites for installation, network planning, external affairs and construction operations.


“We have lots of facilities throughout the Los Angeles area, including Westlake Village and Thousand Oaks,” said Steve Smith, California spokesman for SBC.


Most of the announced cuts will come from both merger partners in the sales, administrative and engineering departments. SBC spokeswoman Denise Koenig said it was too early to tell where the cuts will hit geographically.


AT & T; has an Internet data center in Hawthorne that it opened in 2001. The company, which serves mainly business and long-distance customers, wouldn’t say how many of its 47,000 employees were in California.



Company reunion


The merger will reunite AT & T;’s remaining operations with one of its well-known offspring in Southern California. One of the companies that formed SBC, Pacific Telesis, was once a part of the AT & T; monopoly. As PacBell, it provided telephone service to many parts of Southern California.


PacBell was spun off with Ma Bell’s breakup in 1984, becoming one of the seven regional Baby Bells and competing against its former parent. It was renamed Pacific Telesis before being purchased by Southwestern Bell in 1997, with the resulting company called SBC Communications.


The reunion, however, cannot be called triumphant. AT & T;’s declining revenues have caused some SBC shareholders to pan the deal. Since March 2001, communications companies have laid off nearly 300,000 workers, according to the Labor Department.


More cuts are expected to come, as SBC struggles with rapid changes in technology that have introduced new competitors and technologies to voice and data services. “This could only be the first wave,” said Victor Schnee of New Jersey-based Probe Financial Associates, an independent telecommunications research firm.


Because of the size of the merger $16 billion, 210,000 employees and many billions of dollars in assets the companies will be under pressure to make consolidation work and avoid disappointing Wall Street. “Could it affect L.A.? Of course it could,” Schnee said. “They can’t possibly say, ‘We’re only getting rid of 13,000 jobs over the next three years.'”


Koenig said the announced cuts would be phased out over a three-year period after the close of the deal, which is anticipated for late 2006. But both companies are continuing with scheduled job cuts prior to the acquisition’s completion.



*Bloomberg News contributed to this story.

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