AT&T outlines $14 billion US network investment

AT&T outlines $14 billion US network investment

US carrier AT&T has outlined a $14 billion investment over the next three years to significantly expand its wireless and wireline broadband networks to support IP data growth and demand for mobile application and cloud services.

The investment plan named Project Velocity IP (VIP) consists of several individual wireline and wireless initiatives and is designed to expand AT&T's highest potential growth platforms and to drive continued revenue increases from existing and new products.

“This is a major commitment to invest in 21st Century communications infrastructure for the United States and bring high-speed internet connectivity - 4G LTE mobile and wireline IP broadband - to millions more Americans,” said Randall Stephenson, AT&T chairman and CEO. “We have the opportunity to improve AT&T’s revenue growth and cost structure for years to come, and create substantial value for shareowners.”

Stephenson said that revenues in all of AT&T’s key growth areas - wireless, data, U-verse and strategic business services - were growing at a double digit rate and that Project VIP would expand the carrier’s potential to make them available to more customers.

“With our strong balance sheet, these capital investments are manageable. We are very confident in our ability to execute this plan. These are things we’ve done before – logical extensions of proven technologies and already successful businesses.”

Under the plans, AT&Ts 4G LTE network will be expanded to cover 300 million people in the US by the end of 2014, an increase from the 50 million the carrier originally planned to cover by the end of 2013. AT&T expects 99% LTE coverage in its 22 state wireline service area.

The carrier revealed that it had acquired spectrum through more than 40 spectrum deals this year and plans to buy additional wireless spectrum to support its LTE network. Much of this will come from WCS spectrum after the carrier gained FCC approval for use of WCS frequencies for mobile broadband earlier this year.

Between what it already owns and transactions pending regulatory approval, AT&T expects to have 118MHz of spectrum nationwide and will continue to press the FCC for the release of additional frequencies.

AT&T will also deploy small cells, macro cells and additional distributed antenna systems to increase the density of its wireless network and improve network quality and spectrum efficiency.

On the wireline side AT&T will expand its IP network to reach 57 million customer locations, or 75% of all customer locations in its wireline service area by the end of 2015.

This will be undertaken through an expansion of the U-verse TV, internet and VoIP platform by more than a third to 8.5 million additional customer locations by the end of 2015 and an expansion of its IDPSLAM service , offering high-speed IP internet access and VoIP to 24 million customer locations by the end of 2013.

U-verse broadband internet speeds will also be upgraded to up to 75Mbps and IPDSLAM speeds of up to 45Mbps.

In the 25% of locations where is it not feasible to build a competitive IP wireline network, AT&T said that its expanded LTE network would be used to offer voice and high-speed IP services.

On the business front AT&T is expanding its fibre network to reach an additional one million enterprise locations, 50% of the multi-tenant business buildings in its wireline service area.

The carrier said it expects this deployment to increase business revenue growth, accelerate provisioning and facilitate the installation of distributed antenna systems and small cell technology to offload traffic.

AT&T will use these wireline and wireless expansions to support new initiatives. These include the Digital Life platform for IP-based home security and automation, which is set to launch in 2013, mobile premise solutions which are launching today as an alternative to wireline voice and its ISIS mobile wallet joint venture, which is being trialled in Austin Texas and Salt Lake City.

Elsewhere the carrier also said it had already secured deals with Ford, Nissan and BMW to position itself as a leader in the wirelessly connected car market and hoped to expand its capabilities from vehicle diagnostics and real-time traffic updates to consumer facing applications.

The carrier expects Project VIP to strengthen its ability to pursue new billion dollar business opportunities in the four key growth areas of strategic network services, cloud, security and mobility solutions and offered optimistic financial projections.

AT&T said earnings per share are expected to grow in the mid single digit range with potential for stronger growth going forward. The carrier’s consolidated revenues are expected to grow equivalent to GDP plus 100 basis points, with wireless, wireline data and managed IT services to comprise 90% of total revenues by 2016 from about 80% today.

AT&T also said it had taken significant steps to improve its capital structure had reduced its debt by approximately $9 billion over the past three years and had taken advantage of historically low interest rates to refinance $20 billion in debt while reducing its debt costs by 60 basis points.