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Baby Bell Will Cut 5,600 Jobs : Communications: Bell Atlantic will also take a $2.3-billion third-quarter charge in preparation for its digital transition.

August 16, 1994|From Reuters

NEW YORK — Bell Atlantic Corp. said Monday that it will cut its work force by 5,600 over the next three years and take a $2.3-billion charge in the third quarter as it prepares to move to an all-digital communications network.

The charge will result in losses for the third quarter and the year, the Philadelphia-based regional phone company said in a statement.

Bell Atlantic said the charge consists mainly of a $2.15-billion, non-cash provision to discontinue its accounting methods as a regulated company and to revalue its telephone operations.

The company is also taking a $100-million charge for the staff cuts and a $35- to $45-million charge to write off some non-strategic investments.

Bell Atlantic is "getting more efficient to deal with upcoming competition," said Steven Yannis, an analyst at Kidder Peabody.

Last September, another regional phone company, US West, said it would take a charge of $3.8 billion to lay off 9,000 employees, accelerate its effort to adopt new technology and to change its accounting methods.

In May, Nynex Corp. announced a $1.6-billion charge along with plans to cut its work force by a third, or about 16,800. Nynex also accelerated its plans to deploy a fiber-optic network and said it would lay another 500,000 miles of fiber-optic line by the end of 1995.

Bell Atlantic said it is making accounting changes appropriate to a competitive, rather than a regulated, industry that may be facing major legislative changes.

After its summer recess, Congress is expected to vote on whether the regional bell operating companies can enter into the intrastate long-distance market.

Wall Street analysts said Bell Atlantic's accounting changes will accelerate the depreciation of the company's aging copper network equipment, which is being replaced by a digital network able to carry voice, data and video.

Bell Atlantic and all the regional telephone companies are moving to fiber-optic networks.

Fiber-optic networks will provide wider "pipes," or bandwidths, through which the Baby Bells are hoping to send a stream of products and services, ranging from voice, data, messaging and interactive video, on the much-touted information superhighway.

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