How AT&T Is Working to Reduce Its Cost Burden

In what appears to be a step aimed at reducing its cost burden, AT&T (T) is shrinking the workforce of its weak businesses, according to a Reuters report. The company is not revealing specific areas of job cuts or how many positions it will eliminate. But the business solutions unit is one of AT&T’s operating arms that has been on a decline recently. AT&T’s business solutions revenue fell 5.2% YoY in the fourth quarter, which followed a decline of 4.9% YoY in the third quarter. Even as AT&T cut jobs in some units, the company says it will continue hiring for its fast-growing businesses.

Cutting jobs in declining businesses is viewed as part of efforts by AT&T to control costs and raise funds to invest in more promising operations. The company is aiming to reduce its annual costs by $1.5 billion by 2021. AT&T is banking on its acquisition of Time Warner to drive the cost synergies.

Verizon (VZ), another operator seeking to cut costs, is on track to eliminate thousands of jobs this year including through a voluntary early retirement program and an outsourcing arrangement with Infosys (INFY), according to a report from the Wall Street Journal.

AT&T’s operating expense rose 3.5% YoY to $41.8 billion in the fourth quarter of 2018. Operating expenses rose 18% YoY at Verizon, 8.0% at Sprint (S), and 7.3% at T-Mobile (TMUS) in the fourth quarter.