AT&T will lay off 12,000 workers through 2009 as the company reorganizes and faces a tough economic environment, the company said Thursday.

AT&T will spend US$600 million in its fourth quarter 2008 for severance payments to those workers, which represent about 4 percent of the company's workforce.

The company tried to soften the blow by saying it will add employees in some areas, such as wireless, video and broadband, in order to meet customer demand. Many non-management employees who are affected will have a guaranteed job offer as stipulated in union contracts, AT&T said.

AT&T said it will reduce its 2009 capital expenditure from 2008 levels. Those plans are now being finalized and will be revealed during its fourth quarter 2008 earnings call at the end of January.

Investment firm UBS predicts that capital spending by service providers such as AT&T could decrease by as much as 10 percent in 2009.

AT&T grew both its revenue and net income for its third quarter 2008, boosted in part by a rush of new customers buying Apple's 3G (third-generation) iPhone.

Still, the company missed analysts' expectations. The company reported net income of $3.23 billion, up from $3.06 billion in the third quarter of 2007. Revenue grew from $30.1 billion to $31.3 billion.

IDG News Service

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