AT&T is laying off 12,000 staff and putting the blame on the economy and "a changing business mix".
The cuts amount to roughly four per cent of the US telecoms giant's total workforce.
The telco said it was moving to a more streamlined structure and would cut capital expenditure in 2009 - it is finalising budgets now and will give more details when it posts final results in January.
The redundancies will cost $600m in severance and related charges. The company said many non-management staff were protected by union contracts - all staff will get severance payments in line with union or other agreements.
Although the overall headcount is falling, AT&T said it was still hiring in some areas - wireless, video and broadband - where consumer demand remained strong.
The full statement is here.
Last month AT&T announced new customers in Reno, Nevada would be subject to bandwidth caps, after which they will face additional charges. ®