(Reuters) – An agreement between Verizon and unions potentially ending a nearly seven-week strike includes 1,400 new jobs and pay raises topping 10 per cent, the company and unions representing about 40,000 workers said on Monday.
The deal, which one analyst called “very rich” for Verizon workers, could be a prelude to the company exiting the wireline telecommunications business, transforming into a wireless internet business.
Verizon, the No. 1 U.S. wireless provider, and the Communications Workers of America (CWA) had reached a tentative deal on Friday. Details for the new four-year contract were disclosed on Monday.
The CWA said Verizon agreed to provide a 10.9 per cent raise over four years while Verizon put the increase at 10.5 per cent. According to the CWA, both numbers are correct, with the calculation done by the union including compounded interest that workers would receive 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. “In my opinion, it reinforced their commitment to basically exiting 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.
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.
Striking workers will be back on the job on Wednesday, the CWA said.
Tentative new contract
The workers have been without a contract since the agreement expired in August and healthcare coverage ran out at the end of April. In 2011, Verizon workers went on strike for two weeks after negotiations were deadlocked.
The latest work stoppage stretched across states including New York, Massachusetts and Virginia. Verizon brought in thousands of temporary workers.
New York-based Verizon will add 1,300 call center jobs on the East Coast, and 100 new network technician jobs, Verizon spokesman Richard Young said.
It will withdraw proposed cuts to pensions as well as reductions in accident and disability benefits. The company, however, won cost savings through changes in healthcare plans and limits on post-retirement health benefits.
If union members ratify the agreement, the new contract would run until August 2019.
Members of local unions will vote on the agreement by mail, at mass membership meetings, and at walk-in balloting meetings and all results are due back to the CWA by June 17, according to Bob Master, assistant to the vice president at the CWA.
Master said, “We’re pretty confident the members will be supportive of the agreement,” citing the closeness between the leadership and its members.
Verizon worker Fitzgerald Boyce, 45, said he was likely to vote in favour.
“Of course I am extremely relieved that we have a good contract from what I am reading,” said Boyce, a field technician who lives in Brooklyn, New York. “To be able to keep our benefits and actually increase the number of union jobs is a great thing.”
Verizon and the two striking unions were in contract discussions with the help of the U.S. Department of Labour. In mid-May, U.S. Labour Secretary Thomas Perez brought the parties back to the negotiating table.
The strike, one of the largest in recent years in the United States, drew support from Democratic U.S. Presidential candidates Bernie Sanders and Hillary Clinton.
Shift to mobile
Verizon has shifted its focus in recent years to mobile video and advertising, while scaling back its Fios television and internet services. To tap new revenue, it is boosting its advertising-supported internet business and acquired AOL for $4.4 billion.
Verizon, which claims a high-quality cell network, is locked in a battle for subscribers with competitors AT&T, Sprint and T-Mobile in a saturated U.S. wireless market.
Verizon’s legacy wireline business generated about 29 per cent of company revenue in 2015, down about 60 per cent since 2000, and less than 7 per cent of operating income.
Verizon Chief Executive Officer Lowell McAdam said last week the strike could hurt second-quarter results.
Verizon shares closed up 1 per cent at $50.62 on Friday and are up 9.5 per cent for the year, near its 52-week high of $54.49. U.S. markets were closed on Monday for the U.S. Memorial Day holiday.
(Reporting by Amrutha Gayathri in Bengaluru, Daniel Trotta and Chuck Mikolajczak in New York; Editing by Jeffrey Benkoe and Nick Zieminski)
NOW WATCH: We did a blind taste test of Pizza Hut, Domino’s, and Papa John’s pizza — here’s the verdict
Business Insider Emails & Alerts
Site highlights each day to your inbox.