Verizon, unions agree to pay raises, new jobs to end strike

Mon May 30, 2016 8:16pm EDT
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By Chuck Mikolajczak

(Reuters) - A tentative deal between Verizon Communications Inc (VZ.N: Quote) and leaders of striking unions includes 1,400 new jobs and pay raises topping 10 percent, the company and unions representing about 40,000 workers said on Monday, hoping to end a walkout that has lasted nearly seven weeks.

One analyst called the deal "very rich" for workers at Verizon, the No. 1 U.S. wireless provider, which reached the tentative pact with the Communications Workers of America (CWA) on Friday. Details for the new four-year contract were disclosed on Monday.

The CWA said Verizon agreed to provide a 10.9 percent raise over four years while Verizon put the increase at 10.5 percent. According to the CWA, both numbers are correct, with the union's calculation including compounded interest as subsequent raises are determined from a new base salary.

“They needed to end the strike and they bit the bullet," said Roger Entner of Recon Analytics. He said he thinks the deal "reinforced their commitment to basically exiting" wireline, which he called "the least profitable, most problematic part of the business”

The new contract "gives Verizon four years basically to get rid of the unit. Let it be somebody else’s problem,” Entner said.

But not all analysts saw the deal as the first steps in an eventual sale of the wireline business.

"That is an option available for Verizon," said Jim Patterson, CEO of Patterson Advisory Group. "However, their recent investment in XO (fiber-optic business) would seem to indicate that infrastructure is becoming a more vital part of the business.”

Nearly 40,000 network technicians and customer service representatives of the company's Fios internet, telephone and television services units walked off the job on April 13.   Continued...

A "Now Hiring" sign is posted on a Verizon store in Manhattan in New York City, U.S., May 10, 2016.  REUTERS/Brendan McDermid