AT&T TO CUT JOBS BY 40,000\Telephone giant girds for split-up.

Byline: Edmund L. Andrews The New York Times

AT&T Corp. announced the biggest single job cut in the history of the telephone business Tuesday, and one of the largest corporate work force reductions ever, as the company braces for a new wave of competition in the communications industry.

AT&T said it would eliminate 40,000 of its 300,000 jobs over the next three years and take a $6 billion charge against earnings, all in preparation for splitting itself into three companies by the end of this year.

Up to 7,000 of the cuts will occur in New Jersey, where AT&T has its headquarters at Basking Ridge and has a statewide payroll of 48,000. It is the state's largest employer.

Although substantial job cuts had been expected, the number was bigger and the action will come sooner than many employees and analysts had expected. Some 70 percent of the cuts will occur before the end of the year.

AT&T had set the stage for Tuesday's announcement nearly two months ago, when it offered voluntary buyouts to half of its 150,000 managers. About 6,500 people accepted the offer, which expired Friday; about 30,000 others are expected to be laid off involuntarily. Another 4,000 people work for AT&T subsidiaries that will be sold over the next year.

AT&T had gradually eliminated nearly 75,000 jobs in the last dozen years, but the cutback announced Tuesday was one of the biggest ever in any industry in a single stroke.

General Motors set the record in December 1991, announcing plans to reduce its work force by 70,000 people. The second largest was International Business Machines Corp.'s announcement in July 1993 that it would eliminate 63,000 jobs.

But in sharp contrast to the moves by GM and IBM, which made deep cuts after sustaining heavy damage from nimbler competitors, AT&T's decision comes when the company is healthy and when almost all segments of its business are profitable and growing.

AT&T's move is part of a broader reorganization announced in September that will split the company into three separately owned concerns engaged in communications services, telecommunications equipment and computers.

That broader plan, and Tuesday's cutbacks, are both responses to changes that are expected to rock the communications industry over the next few years - in particular as AT&T and other long-distance carriers prepare for the regional Bell telephone companies to attack the $80 billion long-distance market.

Intense competition is a certain outcome of the telecommunications legislation now pending in Washington. And most industry executives expect technology and market forces soon to force open the local and long-distance communications markets even if Congress cannot overcome its current impasse over the legislation.