AT&T reveals investment strategy for 2018 and main gains in 2017

AT&T campaignAmerican telecom operator AT&T announced $25 billion Capex (capital expenditure) plan for 2018.

Verizon, the main rival of AT&T, announced Capex plan of nearly $18 billion including the company’s investment for 5G roll outs in 2018.

AT&T said its capital expenditures will be approaching $25 billion; $23 billion net of expected FirstNet reimbursements and inclusive of $1 billion incremental tax reform investment.

AT&T is gearing up to launch 5G commercial services in a dozen markets by the end of 2018. Capital expenditure of AT&T was $5.1 billion for the fourth quarter.

Technology Business Review analyst Steve Vachon said the appeal of the 5G technology will be limited initially as 5G-compatible devices are not expected to be available until 2019. 5G-powered IoT use cases such as autonomous driving and advanced healthcare solutions will not be prevalent for at least another several years.

The report said the initial benefit AT&T will realize from its early adoption of mobile 5G will be improved cost efficiencies. 5G offers greater performance and cost efficiencies, and will enable mobile operators to lay a foundational network architecture to support new business models that may arise.

Randall Stephenson, chairman and CEO of AT&T, said: “Our FirstNet win and the opt-in by 100 percent of all states and territories will enable us to put the industry’s most robust spectrum assets to work in building a best-in-class nationwide network for public safety and first responders.”

AT&T financials

AT&T posted revenues of $160.5 billion in 2017 versus $163.8 billion in 2016, primarily due to declines in legacy wireline services and wireless service revenues. Operating expenses of AT&T fell due to cost efficiencies. Operating income was $20.9 billion versus $24.3 billion; and operating income margin was 13% versus 14.9%.

AT&T’s revenues in Q4 was $41.7 billion versus $41.8 billion, primarily due to declines in legacy wireline services, wireless service revenues and domestic video.Operating expenses rose to $41.3 billion from $37.6 billion primarily due to a write-off of certain network assets and higher wireless equipment costs.

Steve Vachon, analyst at TBR, said AT&T generated postpaid phone (+329,000) and video (+161,000) net additions despite heighted competition arising from the converging mobile and video industries.

AT&T’s improved subscriber performance highlights the value proposition of its DirecTV Now mobile bundles and their success in combatting competitive pressures including T-Mobile and Sprint beginning to offer free access to Netflix and Hulu, respectively.

AT&T’s strategies will also help the carrier cement its subscriber base as the company will face heightened competition from new MVNO mobile video bundles from cable providers such as Comcast, Charter and Altice as well as new OTT services that will launch in 2018 including T-Mobile’s upcoming video platform.

Baburajan K