WASHINGTON (MarketWatch) -- AT&T Inc. on Thursday said it would cut 12,000 jobs, or 4% of its workforce, and spend less on new equipment in 2009 in response to a weakening economy.

The Dallas-based phone giant, which had 303,000 employees at the end of the third quarter, becomes the latest corporate bellwether to announce major layoffs. Also on Thursday, DuPont, Viacom and Credit Suisse said they would cull jobs.

Aside from a poor economy, AT&T T, -0.28% cited streamlining efforts and a "changing business mix" as reasons for the reductions. The company noted that it's still hiring in its stronger businesses such as wireless, video and high-speed Internet.

"There's an ongoing industry shift from wireline to wireless and broadband," AT&T spokesman Walt Sharp said.

Most job cuts will take place in AT&T's traditional local and long-distance segments, which have been losing customers for years. Millions of ex-subscribers have switched to cable-phone services or Internet-phone companies such as Vonage. Others have chosen to rely exclusively on wireless, especially younger people.

"AT&T has been losing consumer retail lines at around 10% per year due to wireless substitution and cable competition, necessitating the employee reductions," analyst Peter Rhamey of BMO Capital Markets wrote in a research note.

The reductions will begin in December and continue into 2009, the company said. AT&T plans to book a onetime expense of $600 million in the fourth quarter to pay for severance and related costs.

With the economy now in recession, AT&T also said it expects to devote less money to capital expenses in 2009 than it's spending in the current fiscal year. AT&T is on track to spend roughly $17.8 billion or somewhat less on network expenses in 2008.

The carrier said it will give more details when AT&T issues fourth-quarter results in late January.

AT&T and other phone companies have been scaling back capital expenditures for months and pushing projects further out, according to executives at firms that make networking equipment.

Just last month, Sprint Nextel Corp. Chief Executive Dan Hesse said in an interview that that's exactly what phone companies are doing.

"I think the input from the suppliers is very accurate," Hesse said. "Carriers will begin to slow down or delay projects."

In November, Sprint initiated a buyout program for some employees.

The slowdown is sure to put more pressure on already-battered vendors such as Nortel Networks Corp. NT, Alcatel-Lucent ALU, -1.53% and Tellabs Inc. TLAB

In recent Thursday trades, shares of AT&T fell 2.5% to $28.35, as futures trading indicated a lower opening for the U.S. market.