AT&T return-to-office mandate creates job uncertainty for 60k workers

In a surprising move AT&T has mandated that 60,000 managers return to work in person in one of nine of the company’s offices, despite many employees living far away from any of those locations. While the U.S.’s largest carrier said restructuring will help cost savings and “increase collaboration,” it has ignited outrage among employees who see it as a disguised staff reduction effort, Bloomberg reported today.

AT&T CEO John Stankey estimated that around 15% (9,000) of the affected managers will have to choose between relocating or leaving the company. But Bloomberg's sources within AT&T claim that due to proposed office reductions and task-specific realignments, the actual number of affected managers could be closer to 25,000. In most cases AT&T won't pay relocation expenses.

Even though the company has 350 offices across all 50 states, managers are being asked to work from offices in Dallas; Atlanta; Los Angeles; San Ramon, California; Seattle; St. Louis; Washington; and two New Jersey towns, Middletown and Bedminster.

An internal document sent to employees indicated that their work designation and location will be determined by their leadership team based on business needs and collaboration requirements. AT&T supervisors are expected to complete the new assignments by the end of June.

The lack of clarity and transparency regarding how employees will be assigned to the nine designated hubs has caused confusion and chaos within the company. There are no detailed explanations of the selection process, and even employees currently based in one of the hubs could be reassigned to another.

“It’s a layoff wolf in return-to-office sheep’s clothing,” said an AT&T manager, and one of Bloomberg’s anonymous sources.

AT&T did not immediately respond to a request for comment from Fierce Wireless.

The return-to-office mandate comes on the heels of what Stankey had called AT&T’s “most profitable quarter and most lucrative EBITDA generation in our wireless business in its history” earlier this spring. The carrier reported 424,000 postpaid phone net adds in its first quarter 2023. And it reported domestic wireless service revenues of $15.5 billion, up 5.2% year over year. 

Realistically, the company is facing challenges including high mobile phone inventory costs, construction expenses to build its 5G network and declining contributions from its DirecTV joint venture. Despite his public optimism, Stankey is under pressure to reduce costs after AT&T's first-quarter free cash flow fell for the second consecutive year.

AT&T shares fell more than 10% this April after the company announced earnings with $1 billion in free cash flow, far below analyst estimates. 

Additionally, the company's mobile phone subscriber growth has slowed down.

Jamie Lumley, analyst at Third Bridge, wrote, "AT&T continues to see a slowdown in growth for its mobility segment. We’ve heard from our experts that the company is running out of headroom when it comes to gaining new customers, even though AT&T has seen relatively strong net adds for longer than many had expected."

AT&T has periodically reduced its workforce through a process known internally as "surplussing." But the new return-to-office mandate is viewed as AT&T’s most drastic cost-cutting measure yet.

In the company's Q1 earnings call Stankey perhaps foreshadowed the restructuring that is now bound to cost thousands of jobs. He said, “We remain on track to achieve our $6 billion-plus cost savings run rate target by the end of the year, if not sooner. In fact, we believe we can further accelerate cost take-outs as we progress through the year.”