Embarq Cuts Jobs. More Trouble Ahead For Telcos

Embarq, the wireline division spun off by Sprint, today announced that it would cut between 500 and 700 jobs and eliminate 300 contractors. The company lost about 170,000 landlines in the most recent quarter. According to an AP report, in June Embarq handed over some service centers to Nokia Siemens Networks and off-loaded 256 Embarq workers to NSN. It has plans to cut some call centers — another 210 jobs. Embarq currently has about 17,000 employees.

This is the latest pointer to the continuing troubles of U.S. telecom carriers, as I outlined in an earlier essay. Embarq’s problems are not unique. Several smaller players are facing tough times. In addition to general economic malaise, many are simply replacing their landlines with cellphones as their primary voice connections.

The telecos have also been hit hard by a slowdown in sales of broadband connections. Embarq added a mere 24,000 new connections in Q2 2008. Broadband connections have been a lucrative business for wireline providers, who have seen access lines evaporate by the month.

Such trends are leading to talk that we are going to see mergers among rural phone companies like Windstream and Frontier. Reuters recently quoted analysts saying that Windstream would be the main consolidator and Embarq is too big for them to buy — at least for now.