AT&T Records $10 Loss Due To Longer Life Of Former Employees

AT&T Records $10 Loss Due To Longer Life Of Former Employees

A $10 billion pretax loss is expected by AT&T in the fourth quarter due to its abandonment of some copper assets and the longer lifespan of its former employees.

The loss of the mobile service provider includes a $7.9 billion charge due to an updated mortality assumption, which indicates changes in the post-employment and pension plans of the company. The company made this revelation during its regulatory filing last Friday. The telecommunications giant also indicated that the rate used in measuring pension obligations was also reduced.

The changes in its post-employment plans come as retirees have started to live longer compared to around ten years ago. The mortality tables of the Society of Actuaries were updated in October, which indicated an increase in the life of people over 65 years old. The changes indicate bigger contributions by AT&T for the pension plans to meets its obligations for the additional years.

The company also incurred losses due to changes in pension plans around three years ago. During that time, it took $6.7 billion loss in the fourth quarter mainly due to some changes in the way it accounts for pension benefits and required breakup fees following its failed bid for T-Mobile USA.

Another $2.1 billion charge will be taken by the company due to its decision to abandon some copper assets, which may be considered unnecessary in the future. Telecom companies have started to use fiber-optic lines instead of copper wiring since it offers higher data rates and have a longer reach.

The operating results and margins of the company is not expected to be affected since higher asset gains are expected to offset any losses due to changes in its pension plans. The company is expected to record $34.68 billion in revenues for the fourth quarter after it posted a third-quarter revenue of around $33.25 billion. AT&T is set to release its financial results for the fourth quarter on January 27.

Posted by James Fried on Thursday January 22 2015, 1:25 PM EST. Ref: CNET. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0