Whose Job Is Safe in the AT&T, T-Mobile Merger?

AT&T said that the cost of acquiring rival T-Mobile -- $39 billion -- will be more than offset by the money it will save by cutting costs through synergies between the two in areas like retail stores, advertising budgets, staffing and other administrative expenses.

This might be good news for investors, but troubling for employees at the two companies who may find that their jobs have been deemed redundant.

"With $39 billion in synergies, you're thinking, 'What jobs are safe?' They've got some big cuts to make,'" said Joe Bonner, a securities analyst that covers the telecommunications industry at Argus Research Company.

Based on conversations with research analysts and job recruiters familiar with the telecommunications industry, it seems virtually no employees are safe from possible layoffs except for highly skilled engineers and techies responsible for advancing network speeds and broadband.

AT&T declined to comment about potential job cuts in specific areas and said most reductions would be handled through attrition. T-Mobile told FINS it expects if there are any job cuts they would be handled with the same level of "compassion and support" demonstrated by the company in the past.

"The bottom line is that consolidation is going to occur," said Kurt Kraeger, managing director of Robert Walters recruiting in New York. "They can consolidate the advertising; all the sales people will be integrated; the retail stores will be combined." But "the growth in the smartphone area and broadband growth is going to require them to have a lot of technology people."

Right now the assumption is that since AT&T is doing the acquiring, T-Mobile employees will be the ones to get the ax, but this may not necessarily be true in every area, said F. Drake Johnstone, an equity analyst at Davenport & Co. "They may find that T-Mobile has the best practices in some areas," he said. "There may be a regional manager who's a better fit."

Departments that may be shaken up likely include procurement, the employees responsible for bulk purchasing of network equipment -- like routers, transmission technology and cellphone handsets, said Johnstone. Along with executive leadership, mid-level regional managers will also be reduced, he added.

"Just because AT&T goes from 96 million subscribers to 130 million doesn't mean they need as many executives," Johnstone said.

T-Mobile retail locations in close proximity to AT&T stores are likely to be shuttered, said Johnstone. "If you're a T-Mobile employee in a small town or rural area, your job may be more secure if there is not an AT&T store on the next block," Johnstone said. AT&T has 2,200 company-owned retail outlets in the U.S.; T-Mobile has 2,049.

Sales, marketing, human resources, finance, customer service and call-center workers may see consolidation, as well, said Bonner, the analyst at Argus.

The Communications Workers of America -- the union that represents about 150,000 AT&T employees in retail, call centers, and technical support -- has endorsed the merger and predicts job growth for the companies as opposed to most analysts and technology recruiters. The union said that AT&T's promise to invest $8 billion in broadband infrastructure improvements will require more employees to service the expanded customer base.

"It's the union's goal to make sure that the transition is handled smoothly and by attrition," said George Kohl, senior director of collective bargaining and technology at CWA.

Jeffrey Silva, a telecom policy advisor at Medley Global Advisors, an independent investment advising firm, said that there will likely be new jobs created from expanding broadband speeds and access, but that they might not offset jobs lost through layoffs. However, Silva said, it's unclear whether the newly created jobs will be permanent or temporary.

An AT&T spokesperson told FINS in an email that it expects it can achieve "most" of the consolidation through attrition, allowing its older workers to retire without hiring replacements. Data from the company's 2010 annual report shows that despite almost doubling revenue from $62.5 billion in 2006 to $124.3 billion in 2010, the company shed 37,590 jobs. (AT&T has 266,590 employees today, compared to T-Mobile's 37,795.)

In a statement to FINS, T-Mobile said that decisions on jobs can't be made until the merger closes in what it expects to be 12 months. The company noted that "our employees' talent and commitment is an important part of making this combination a success." The statement also noted AT&T's stated desire to have most reductions come through attrition, but added that, "if there are positions that aren't necessary after the transaction closes, we expect affected employees would be treated with the same high level of sensitivity, compassion and support we've demonstrated in the past."

A boom in demand for wireless technologies hasn't prevented the telecommunications industry as a whole from hemorrhaging jobs over the past decade, largely as a result of declines in the industry's legacy land line business, said analysts. According to the Bureau of Labor Statistics, there are nearly 600,000 fewer telecom jobs today than there were a decade ago. In 2001, the industry employed 1.45 million people in the U.S.; in 2011 that number was reduced to 877,100, a 39.7% decrease.

BLS employment projections indicate the industry's decline as a whole will continue, with an 8.8% decrease in the total number of industry jobs between 2008 and 2018. The agency notes that even with increasing demand for telecommunications services, "employment will decline as productivity increases rapidly" -- that is, advances in technology will make employees increasingly superfluous. "Those with up-to-date technical skills will have the best job opportunities," the report continues.

Kraeger predicted that network engineers from both companies will be in high demand if and when the merger is completed, as it will take about four years to integrate their two networks, but the need for engineers will remain even after the integration is completed.

"The future is in mobile apps, and the more apps that are added, the more broadband the telecoms are going to need," Kraeger said. "AT&T needed technology people anyway, so they're going to get a lot of good engineers from Deutsche Telekom [parent company of T-Mobile]."

Write to Joe Walker