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Phone Companies Boost Investment While Slashing Payrolls With PM-GTE-Glance, PM-Job

January 14, 1994

Phone Companies Boost Investment While Slashing Payrolls With PM-GTE-Glance, PM-Job Cuts-Glance

DALLAS (AP) _ It may seem like a contradiction: telephone companies talk about spending billions on new technology one day and announce major workforce reductions the next.

Both are the result of the pressing need to stay a step ahead of rivals as technology advances and the industry rapidly changes from a system of regional monopolies to an open, highly competitive arena. Companies can no longer afford to send a worker into a neighborhood to hook up a new phone when the job can be done automatically.

GTE Corp., the latest carrier to react to the challenge, said Thursday it would cut 17,000 jobs and take a $1.8 billion charge against fourth-quarter earnings.

The job cuts - to be carried out over three years, mostly through layoffs - will affect about 25 percent of phone-related jobs at GTE, the nation’s largest local phone company.

″Technology is driving our industry,″ said GTE chairman and chief executive officer Charles R. Lee. ″No matter what the legislature, the administration or the regulators do, we’re going to have a competitive marketplace in the not-too-distant future. And we have to have competitive costs.″

The cuts are similar to but bigger than those made by several regional Bell operating companies, which face the end of monopolies on local phone service as advances in wireless phoning and computers make traditional regulatory barriers meaningless.

When Congress resumes later this month, it will take up several bills to stimulate competition between cable television and phone companies for delivery of advanced two-way voice, data and video services. Vice President Al Gore this week offered to ease regulations on telecommunications companies if they assure that new products will be available to everyone.

GTE, based in Stamford, Conn., employs 130,000 people overall. GTE’s telephone operations subsidiary, which provides about 75 percent of its $20 billion in annual revenue, is based in the Dallas suburb of Irving, Texas.

The company provides phone service in 7,500 communities in 31 states, two Canadian provinces and the Dominican Republic. Its customers are in areas, mostly rural and suburban, not served by the regional Bells. It also publishes 900 telephone directories and provides cellular phone service.

Since 1988, GTE has reduced its telephone operations workforce from 100,000 employees to 73,000.

The pre-tax $1.8 billion charge includes $680 million to upgrade or replace customer service and administrative systems and enhance network software, $410 million to cover severance and $50 million for employee retraining. Consolidation of facilities accounts for another $160 million.

The job cuts announced Thursday are expected to save the company $1 billion annually. GTE said it will reduce customer service and regional network centers around the country from 195 to 13.

Streamlining efforts usually please Wall Street, but investors appeared dissatisfied Thursday. GTE shares fell 25 cents to $34.62 1/2 on the New York Stock Exchange.

The seven regional Bell companies, which were created in the 1984 breakup of AT&T, also have gone through deep payroll cuts. Since 1988, they have collectively shed more than 60,000 jobs.

U S West, which serves 14 Western states, said in September it would cut 9,000 jobs, reducing its work force by 18 percent, and take a $3.8 billion charge. Reports in December said Nynex Corp., serving New York and New England, was mulling cutting one-third of its 66,000 telephone jobs by 1996. Last week, Pacific Bell said it would cut 10,000 telephone jobs over the next three years.

As other companies have in announcing large job cuts, GTE said better computers and phone networks would make life easier for customers.

It said it will trim its many toll-free numbers around the country to just a few. Service representatives visiting businesses will use mobile computers to write contracts and conduct other transactions.

Customers will be able to order phone service by simply plugging a phone into a wall jack, instead of calling the company from another location. GTE will start service immediately, right over the phone, rather than waiting for a technician to flip a switch in the neighborhood.

GTE also will set up a system for consumers to pay their bills through a home computer, as well as make most repairs while customers are on the phone.

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