Deal's effect on Ariz.
The Arizona Republic
Friday, July 15, 2005
With more than half of AT&T's work force in Arizona laid off during the past year, a key question state regulators will examine is whether the long-distance carrier's pending $16 billion merger with SBC Communications will result in even more Arizona job losses.
The Arizona Corporation Commission is considering a requirement that would make the combined company notify the state at least two months in advance of layoffs. At least one commissioner has written a letter asking AT&T and SBC to quantify expected job losses as a result of the merger.
For a state that already has lost more than 1,000 AT&T jobs over the past year, the merger's employment shakeout is an area that the commission will scrutinize, Commissioner Kris Mayes said.
"AT&T's employment already has been cut to the bone, and any more layoffs would be extremely painful," Mayes said.
Arizona is one of nine states that have yet to approve the merger since it was announced in January. Corporation commission staff recommends approval as long as the combined company agrees to comply with the 60-day layoff notification and posts a $200,000 performance bond. A public hearing will be held later this month, and commissioners aren't expected to vote on the deal before September.
While representatives of AT&T and SBC say it's too early to forecast Arizona job cuts as a result of the merger, they anticipate minimal impact because there's little employment overlap.
SBC, which primarily serves local telephone markets but has few operations in Arizona, counted just 44 employees in Arizona at the end of 2004. AT&T has a much larger presence with 897 Arizona workers as of May 2005, according to a filing with the Corporation Commission.
Arizona Department of Economic Security records show AT&T has shed 1,013 jobs in eight separate layoffs since April 2004.
"Telecommunications was really hit hard, especially AT&T," said Ron Delgado, who administers the state's rapid response program for laid-off workers. "Arizona lost a lot of those jobs."
AT&T's job cuts over the past year "is not necessarily indicative of future trends," said AT&T spokesman Andy Backover. "In the long run, it will be better for employees and customers."
Among groups that have voiced support for the merger include the Communications Workers of America, which warned last month that AT&T's future would be marked by "shrinking revenues, shrinking income, shrinking investment and shrinking jobs" without the merger. The combined company would be in a much stronger financial position to compete with the likes of Qwest, Cox and others.
AT&T, the once-proud Ma Bell, has been weakened over the past couple of years as both regulatory decisions and nimble competitors have chipped away at the long-distance carrier's operations. The telecommunications giant retreated from selling to both residential and small businesses a year ago, instead focusing on the more lucrative segment of large customers such as corporations and government.
The combined company would match AT&T's list of corporate clients with San Antonio-based SBC's staple of residential and small business customers and could potentially create the nation's largest phone company.
Representatives of each company have not said whether they intend to compete in the local and long-distance consumer markets against Qwest and Cox.