AT&T to spend $22 billion per year as Capex in next 3 years against $20 billion this year
Telecom Lead America: AT&T is set to spend $22 billion per year as Capex (capital expenditure) in the next three years to expand networks.
This is a significant amount as AT&T’s third quarter Capex alone totaled $4.9 billion.
Recently, TelecomLead.com reported that AT&T may lower telecom Capex in 2012 from the earlier expected $20 billion to the low end of the $19 to $20 billion range.
In January, AT&T had said it expects 2012 capital expenditures to be about $20 billion.
Credit Suisse earlier estimated that AT&T and Verizon together account for approximately 12 percent—or almost 7 percent and 5 percent, respectively—of aggregate global and nearly 60 percent of aggregate U.S. carrier capital expenditures.
Telecom infrastructure companies — Tellabs, Ditech Networks, Sonus Networks, Ciena, Adtran, Alcatel-Lucent, Westell Technologies, Acme Packet, Juniper Networks, F5 Networks and Cisco Systems — have exposure to AT&T, according to Credit Suisse.
On Wednesday, AT&T said its Project Velocity IP (VIP) will involve an investment of $14 billion over the next three years – $8 billion for wireless and $6 billion for wireline. AT&T will expand its 4G LTE coverage on the wireless side and faster service, more fiber-optic lines, and expanded U-Verse availability on the landline side.
“This directly addresses the strategic questions concerning our spectrum position and gives us a bigger platform for new growth,” said AT&T CEO Randall Stephenson. “The last five years have been an adrenalin rush and in the next five years the cloud technology will drive even more change. Over next five years every industry will change and there will be demand for high-speed secure networks.”
AT&T will extend its 4G LTE coverage to 300 million people by the end of 2014, 50 million more people than previously planned. The company expects to cover 99 percent of all customer locations with 4G LTE.
The mobile giant is looking for the government to rush the clearance of new wireless spectrum. In addition, the company will focus on deploying small cell technology with more distributed antenna systems and cell sites to increase the quality of coverage.
AT&T will expand its wired Internet protocol network to 75 percent of customer locations in AT&T’s 22-state wireline territory by the end of 2015. Project VIP’s upgrade plan will also mean significantly higher speeds offered to its customers. In areas where its wireline network can’t be expanded in a cost-efficient way, AT&T will rely on its 4G LTE network.
Once the investments are made, 90 percent of its revenue will come from its high-growth area as it looks to shed its older legacy businesses such as traditional phones and landline connections.