AT&T Inc forecast a $2.7 billion non-cash charge in the fourth quarter due to a change in the way it recognizes gains or losses for pension and other post-retirement benefits.

The No.2 U.S. mobile service said the gains and losses will now be recognized in the year in which they are incurred, switching from its earlier method of amortizing over a period of many years.

It will switch to the new accounting method from the fourth quarter of 2010, and expects to take a hit of 28 cents a share in the quarter.

AT&T expects 2011 adjusted benefit costs to be in line with 2010 adjusted levels.

Going forward, all forecasts regarding benefit costs will exclude this gain or loss adjustment to be taken each fourth-quarter to reflect actual results, the mobile operator said.

Shares of the Dallas, Texas-based company were up 11 cents at $28.15 in trading before the bell on Thursday on Nasdaq. The stock closed at $28.04 on Wednesday.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Roshni Menon)

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