As the wireline service provider market continues to consolidate down to a smaller group of more powerful players, the question for industry watchers is how many people work for the nation’s top 5 Tier 1 wireline carriers?
To answer this question, we dug into the last three years of Securities and Exchange Commission (SEC) filings from the nation’s largest wireline carriers. During this period, AT&T and Verizon—the two largest telcos—have seen various fluctuations in their employee counts.
In looking at the numbers, it should not be surprising AT&T and Verizon are the two top wireline employers. However, these two companies stand out from others on our list because wireline service is only one part of their business. Unlike the other three service providers on this list—CenturyLink, Frontier and Windstream—AT&T and Verizon have large wireless operations.
A number of factors also play into the fluctuations of employees at these companies: acquisitions, layoffs and asset divestitures.
AT&T immediately expanded its employee base when it acquired DirecTV, a unit that includes a number of employees represented by the Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW). Verizon, while still a top player, now has a wireline network that’s mainly concentrated in the Northeast following the sale of its properties in California, Texas and Florida to Frontier.
No less compelling is CenturyLink, which will also increase its employee base when it completes its acquisition of Level 3 Communications later this year. Meanwhile, Frontier's acquisition of Verizon’s assets in California, Texas and Florida drove up its ranks of workers.
While it is hard to put a finger on one issue as to what’s behind the increase or decline in the number of employees at these companies, it’s worth taking a look at the numbers of the five largest wireline operators.
We have provided the employee numbers for details on each service provider, including the number of unionized employees they currently have.
Note: Windstream only provides its employee numbers on a yearly basis, so those values are used for the intervening quarters.
Out of this group of companies, AT&T is clearly the largest employer with over 264,530 employees. This figure fluctuated in recent years due to retiring workers and asset sales.
While it’s unlikely to sway the wireline ranks, AT&T’s employee base could jump by an estimated 25,000 after the telco completes its acquisition of Time Warner. In 2013, AT&T sold off its Connecticut wireline assets to Frontier, but the impact was minimal on the telco’s employee ranks since that was one of its smallest markets.
One of the interesting characteristics about AT&T is the prevalence of employees that belong to a labor union. As of end of the first quarter, AT&T said roughly 48% of its employees were represented by the CWA and the IBEW unions.
The telco’s relationship with CWA and IBEW workers has been tenuous. Earlier this year, CWA-represented wireline workers in California, Connecticut and Nevada joined their fellow wireless workforce in a three-day strike. This strike was focused on disrupting local retail stores and call centers across multiple states of AT&T’s territory.
The telco has over 17,000 wireline workers in two states represented by the CWA union. AT&T West wireline employees represented by the CWA union in California and Nevada recently rejected the telco’s latest tentative labor agreement, which covers 17,000 workers.
While Verizon has not conducted a large-scale lay off its employee base, it’s clear that the sale of its wireline assets in California, Florida and Texas had an effect on its base as employees in those regions transitioned to Frontier.
Similar to AT&T, Verizon revealed that 23% of its workforce is represented by a union—a powerful force inside the telco. It’s clear that union wireline employees have a great influence on how Verizon operates as a company. Despite increasing more of its overall focus on wireless, a large group of the wireline unionized employees hamstrung Verizon’s wireline business last year, stopping it from fulfilling new subscriber installations, when they went on a 45-day strike.
Due to the work stoppage, Verizon was not able to fulfill new Fios video or broadband orders during the second quarter of 2016, losing 13,000 internet subscribers. During the labor strike, the telco said the management team and replacement workers had to focus on network maintenance and repair.
Making matters worse, cable competitors like Charter and Comcast used Verizon’s issues as a means to lure frustrated Fios subscribers onto their DOCSIS hybrid fiber-coax (HFC)-based platforms.
Tracing its roots back to a small town telephone company founded over a century ago by Clark Williams, CenturyLink has rapidly transformed itself into the nation’s third largest wireline operator. It achieved this feat via its own organic efforts by acquiring three wireline players—Embarq, Savvis, and Qwest—as well as a number of cloud-based software companies.
But CenturyLink’s biggest bet is its pending acquisition of Level 3 – a purchase that will advance the service provider’s domestic and global standing, particularly in the business services segment with an expanded set of fiber assets and network service offerings, including IP VPN and SD-WAN. CenturyLink didn’t disclose how many employees it will acquire from the Level 3 acquisition.
In an SEC filing, CenturyLink noted that that about 37% of its employees are members of various bargaining units represented by the CWA and the IBEW. Nearly 12,000, or 30%, of the telco’s employees are subject to collective labor bargaining agreements that are scheduled to expire during the remainder of 2017.
This group includes nearly 10,000, or 25%, of its employees that are subject to collective bargaining agreements that are scheduled to expire in October 2017. Employees represented by the CWA are in the midst of negotiating new contracts in Northern and Central Florida regions as well as in Texas, for example.
Being a traditional telco, CenturyLink has not been immune to job cuts, particularly as its legacy voice service revenue base shrinks due to more consumers ditching their landline phones for a wireless-only voice service.
The service provider acknowledged that it has periodically reduced its workforce due a number of factors: competitive pressures, access line losses and related legacy revenues, cost reductions, process improvements through automation and integration efforts from its acquisitions.
One of the biggest job cut initiatives came in September 2016 when CenturyLink announced it would lay off 3,000 of its employees due to ongoing revenue losses in its legacy voice services business. Similar to its wireline brethren AT&T and Verizon, CenturyLink is also seeing that while next-gen services like FTTH and Ethernet are gaining momentum, they have not been able to replace the revenue lost from its higher margin TDM services.
Frontier saw a dramatic increase in its employee base in 2016 after acquiring Verizon’s assets in California, Texas and Florida.
While earlier acquisitions Frontier made of AT&T’s Connecticut wireline properties and a separate set of assets from Verizon in 14 states drove up Frontier’s employee count, the latest acquisition had the greatest impact on its employee base. After completing the Verizon California, Texas and Florida deal last April, Frontier saw its employee base jump from a little over 20,000 to 30,000 employees.
However, when Frontier took control over Verizon’s lines in these markets, the service provider saw widespread problems with customers seeing service outages and fulfilling orders. Part of the problem was related to a call center operation operated by Verizon in the Philippines. Frontier had since hired more customer service representatives based in the United States to handle customer care calls.
While Frontier does not call out the total of union-represented employees, the assets in California, Texas and Florida came with a number of union-represented employees. In California, the state has over 3,400 employees represented by the CWA, while Texas and Missouri have 2,000.
After finally getting its service ordering issues under control, the service provider announced last November that it would lay off 1,000 employees as part of what it called a customer-focused reorganization effort. Dan McCarthy, CEO of Frontier, told affected employees that the layoffs are part of a broader effort to rein in costs following multiple years of integrating assets it acquired from Verizon and AT&T in various states.
Such a move should have not been much of a surprise, particularly as it has seen losses and challenges from the integration of the Verizon properties. Also, the telco named Perley McBride as its new CFO in September 2016, replacing John Jureller, who guided Frontier through its aggressive M&A cycle. McBride, who returned to Frontier following stints at Cable & Wireless and Leap Wireless, is known for his cost cutting and operational expertise.
Windstream’s employee base may have been relatively stable in recent years, but the service provider saw some fluctuations after completing its EarthLink acquisition.
Upon acquiring EarthLink, Windstream cut about 280 jobs in its ILEC, small business and enterprise segments as well as in its engineering, finance and information technology workgroups to more efficiently manage our operations.
Windstream said in a recent SEC filing that by completing these workforce reductions, it had to pay out $7.1 million in related severance and other employee benefit costs. Additionally, Windstream noted that it had to factor in restructuring charges in the first three months of 2016. These mainly consisted of $4.3 million of severance and other employee-related costs were in connection with several small workforce reductions.
Windstream currently has 1,259 of its employees are part of collective bargaining units. Unlike Verizon, Windstream said it “had no material work stoppages due to labor disputes with our unionized employees” in 2016.