SBC Communications Inc. officials expect to recover nearly all of the cost of its $16 billion acquisition of AT&T through new revenue, operational efficiencies, and the elimination of nearly 13,000 jobs. The company says it expects those steps to produce more than $15 billion in what it calls "synergies." However, that won't happen until the deal passes regulatory muster, which could take more than a year.
The new revenue will come from winning new customers with a complete suite of network services and selling additional services to current customers. For example, SBC will be able to sell wireless services from Cingular Wireless, which SBC owns 60% of, to AT&T's business customers. AT&T sold off its wireless unit last year to Cingular and doesn't offer cellular voice or data services.
SBC also will be able to offer AT&T's broad menu of national and international voice and data services to its regional business customers.
The company also expects to achieve savings by loading some of its national and international traffic onto AT&T's global network and by shifting some of AT&T's traffic traveling to SBC's 13-state region onto SBC's network.
But the bulk of the $15 billion--around 60%--will come from job cuts, which the company describes on a slide presentation for analysts on its Web site. SBC employs around 163,000 and AT&T has around 47,000.
The presentation says the combined entity will be able to cut 5,126 jobs because of network efficiencies and that it expects to eliminate 1,700 positions from its sales department, 3,400 from business operations, and 2,600 from units such as legal, advertising, and public relations.