AT&T Inc. plans to contribute a stake in its wireless business valued at $9.5 billion as a voluntary contribution to help fund its employee pension plan.
The stake will come from a new class of so-called preferred equity shares in AT&T Mobility II LLC, the holding company for AT&Ts wireless business, according to a filing. The Dallas- based company, in a letter of application send to the U.S. Labor Department, said it has 600,000 employees and retirees under the pension plan.
The reason for funding the pension this way is that it addresses AT&Ts pension commitments in a way that gives the company flexibility to continue to invest in the business and return value to shareholders, AT&T said in a statement.
Two days ago, Verizon Communications Inc., the No. 2 in the industry, said it was transferring about $7.5 billion in pension obligations, or one-fourth of the total, to Prudential Financial Inc. to reduce risk on its balance sheet.
AT&T said it expects to get approval from the Department of Labor before the end of 2013. Before the equity contribution, the estimated required contribution to the fund was about $300 million for next year.