AT&T is cutting thousands of jobs and it’s just the beginning

AT&T Inc. is notifying thousands of employees that their jobs are being eliminated as part of a $6 billion cost-cutting push, an attempt to slim down one of the most heavily indebted companies in the U.S.

The cuts follow through on a plan that Chief Executive Officer Randall Stephenson outlined in October when he said the company would remove “big chunks of costs” over two years.

“There will be targeted, but sizable reductions in our workforce across executives, managers and union-represented employees,” AT&T said in a statement Tuesday.

The phone giant, which traces its history back to Alexander Graham Bell in the 1800s, is trying to regroup around advanced communications services like 5G wireless. It’s also plowing billions into entertainment content and marketing for its streaming platform HBO Max. Other areas, including its retail stores, will be pared back.

With more than $160 billion in debt, AT&T has one of the largest debt loads of any nonfinancial company and has been under pressure to sell assets and reduce costs.

The pandemic gave AT&T a “head start” on its cost-cutting plan, said Jeff McElfresh, head of the communications division, speaking on a webcast with investors Tuesday. The nationwide lockdown forced many retailers to close stores and conduct sales online whenever possible. For AT&T, the shift showed that it could get by with fewer stores.

When AT&T emerges from this period, it will “not have as many stores as we did before COVID,” McElfresh said.

AT&T has about 2,200 company-owned stores and had to close most of them to protect customers and employees from the coronavirus.

The belt-tightening efforts are drawing criticism. In a statement Tuesday, the Communications Workers of America chided AT&T for its plan to close 250 stores and cut jobs.

The union said it was informed by the company that 3,400 technician and clerical jobs were being eliminated in the U.S. over the next few weeks.

“Reducing our workforce is a difficult decision that we don’t take lightly,” AT&T statement said. The company is offering landline technicians voluntary buyout packages.

According to reports last week, the company was considering selling or possibly licensing its gaming unit Warner Bros. Interactive Entertainment, as part of its financial rehabilitation plan.

AT&T’s Stephenson is a member of the Business Roundtable of CEOs and has said companies need to step up to help employees through the pandemic. On Tuesday, he also announced he was joining a new committee on the roundtable to fight racial injustice.

“If we are in a war to keep our economy going during this crisis, why is AT&T dismissing the troops?” Communications Workers of America President Chris Shelton said. “AT&T could help lead the country toward recovery by partnering with its workforce to build next generation networks. Instead the company is adding to the pain of the recession already underway.”