DALLAS (AP) – AT&T Inc. said Wednesday that union workers have approved a new three-year contract covering 8,900 employees in its traditional telephone business.

The agreement, approved by the International Brotherhood of Electrical Workers, replaces a contract that expired June 27. AT&T has been negotiating new labor agreements since February and says it has reached at least tentative deals covering about half of the 120,000 workers under its wireline union contracts.

AT&T said the deal announced Wednesday covers workers mainly in Illinois and northwestern Indiana.

It provides for a 3 percent wage hike in each of the first two years and a 2.75 percent raise in the third, with a potential cost of living adjustment.

Pension contributions rise 2 percent each year.

Workers will be covering more of their own health costs, AT&T spokesman Walt Sharp said, but the deal covers 100 percent of preventive care costs and provides a company-funded health care reimbursement account.

Shares of AT&T declined 13 cents to $27.07 in afternoon trading.