AT&T Inc. (NYSE:T) plans to pump $14 billion into its wireless and wireline broadband business units, as it seeks to expand its 4G LTE coverage. The Texas-based telecom services company is facing critical growth challenges, and now plans to increase its 4G LTE coverage network to 300 million people by 2014. The investment will be done partially over a three year period, beginning in 2012. The company will invest $8 billion in the wireless business, whereas $6 billion will go to its wireline broadband network.
During an investor presentation, today, AT&T Inc. (NYSE:T) CEO Randall Stephenson said, “this directly addresses the strategic questions concerning our spectrum position and gives us a bigger platform for new growth,” as quoted by CNET news.
“The last five years have been an adrenalin rush, and in the next five years the cloud technology will drive even more change. The past five years changed communication industry, but over the next five years, every industry will change, and there will be demand for high-speed secure networks,” Stephenson added.
The company has been under close observation over its growth prospects, but this move will seem to silence the critics, as AT&T Inc. (NYSE:T) sees concurrent investment in both network channels will channel sustainable growth in the coming years.
AT&T Inc. (NYSE:T)’s plan to increase its user network capacity to 300 million by 2014 represents an increase of 50 million, or nearly 20%, as compared to the initial plan of 250 million set for the full year 2013.
The company expects its EPS to grow between 4-6% during the investment period, while better growth rates are expected, going forward. Consolidated revenues are expected to grow by 100 basis points on top of the GDP rate. AT&T Inc. (NYSE:T) also plans to increase its capital investments to the high and mid teens, as a percentage of revenue over the next two years, while normalcy should resume in 2015.
Overall, capital spending is expected to notch the $22 billion mark for each of the next two years, then return to pre-Project VIP levels, noted RTT News.
AT&T Inc. (NYSE:T) expects to use its 4G LTE network in areas where wireline broadband expansion proves to be barely viable in terms of costs and benefits. CNET News also noted that AT&T would also expand its faster wired Internet protocol network to 75% of customer locations in AT&T’s 22-state wireline territory by the end of 2015.
It is also noted that once this project is completed, 90% of At&T’s revenues will come from the two main business units as the company looks to phase out its custom businesses segments, such as traditional phones and landline connections.
At the time of this writing, AT&T Inc. (NYSE:T) stock was trading at $33.82 per share, down $0.98, or 2.82% decline from the previous close.
