Merger to cost 13,000 jobs

NEW YORK -- SBC Communications Inc. expects to eliminate about 13,000 jobs after its $16 billion acquisition of AT&T Corp. closes, but the phone company said yesterday that many positions can be cut through attrition.

The projection came during a meeting with investors. SBC plans to acquire AT&T, its former corporate parent, in a deal that would create one of the world's biggest telecommunications companies.

The cuts would come in addition to existing plans at the two companies to eliminate at least 12,000 jobs before the merger is finalized. Combined, the 25,000 expected cuts represent about 12 percent of the current workforce at the two companies. SBC declined to say in which states the 13,000 cuts might come.

SBC executives also offered a more optimistic projection of how long the deal might take to gain approval from regulators, saying the merger should be completed by early 2006. Monday, the closing date was put closer to mid-2006.

Overall, workforce reductions will generate nearly 60 percent of the cost savings the merger is expected to generate, SBC executives said. Other savings will come from combining budgets for capital expenditures and marketing, combining facilities to reduce real estate and utility costs, and improved purchasing power. These savings are expected to accelerate from between $200 million and $600 million in 2006, depending on when the deal closes, to between $1.1 billion and $1.6 billion in 2007. Annual savings could exceed $2.4 billion in 2009, the executives said.

The meeting included some pointed questions from analysts and money managers who asked whether AT&T had shopped itself to anyone but SBC and whether it sold itself too cheaply, despite its rapidly deteriorating business. Its chairman, David Dorman, rejected the suggestion.