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Layoffs expected at AT&T as company struggles to pay off significant debts

Layoffs expected at AT&T as company struggles to pay off significant debts
(Image credit: Getty)

AT&T is one the biggest cell phone operators on the market, but it looks like things aren’t going so well for the company as it revealed plans for “tens of billions” of dollars of cost cuts from across the business. Speaking at a Morgan Stanley conference, AT&T President and COO John Stankey said told At&T investors that the company “has looked at effectively 10 broad initiatives that we believe can generate double digits of billions over a 3-year planning cycle."

The most obvious and unfortunate of those ten initiatives is being termed as “headcount rationalization”, which is corporate speak for job losses. There was no word on how widespread of extensive these job cuts would be, but Stankey did note that AT&T had already begun the process in 2019 and that they have “some additional work to do in that area”. While the company is still one of the best cell phone providers, this is likely to have an impact on its service and infrastructure.

Alongside the job cuts, AT&T has other medium and long term plans in progress that should help the beleaguered cell carrier to bounce back. Answering a question during the conference, Stankey said that they were looking at "IT rationalization and architecture rationalization, turning down applications, movement to the cloud, getting cost efficiencies in our very, very broad infrastructure, some of that facilitated by portfolio rationalization". That’s a lot more business speak that doesn’t mean much, but it boils down to AT&T doing a full cleanup of its operations to try and bring its operating costs down by improving the efficiency of its systems.

The war to come

AT&T has been seeing healthy profits of late, but the company is ladened with enormous debts to the tune of $163.1 million at the end of 2019. That is a staggering amount of money to owe, even for a company as big as AT&T. Things might only get worse this year too, with the coronavirus outbreak hampering the best smartphone manufacturers like Apple and Samsung, which is likely to have a knock-on effect for cell providers.

AT&T is currently the second biggest cell phone provider in the US, behind the market leaders Verizon Wireless. However, it could have competition for second place soon thanks to the upcoming merger between T-Mobile and Sprint, which will see the third and fourth most used cell providers combine into a single entity. This will combine the two companies’ user bases and cell phone coverage maps, giving them a huge leg up in the fight for cell provider supremacy.