If you were hoping that the job situation in the telecom sphere had turned around, it may not be over yet – at least not for ILECs. In a press release today, Windstream (NYSE:WIN, news, filings) announced that it will cut about 5% of its workforce, or 350 out of 7100 jobs, and will take a $15M charge in the fourth quarter. They say they will look for volunteers and attrition to reduce the impact, but in this environment there won’t be that many willing so there will surely be layoffs – good luck to all affected.
Late last year, at the peak of the financial crisis, the company announced workforce reductions of similar size to this one. Hopefully it isn’t habit forming, but there are no less than three factors driving things like this for the company. The economy is an obvious one, and the steady wireline losses seen by ILECs of all stripes for the past couple years is another, but we should also remember the effects of consolidation.
Windstream was formed in 2006 in a merger of Alltel’s wireline assets with those of Valor Telecom, and has continued to acquire other smaller ILECs including CT Communications in 2007 and D&E Communications just this spring, which undoubtedly has led to cost savings from eliminating overlapping positions. The economy seems to be improving a bit, but landline losses and rural ILEC consolidation seem set to continue unabated, so perhaps habit-forming isn’t far off.
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