(By Balachander) AT&T Inc. (NYSE: T) will invest $14 billion to significantly strengthen its wireless and wireline broadband networks and the telecommunications giant lifted its quarterly dividend 2.3 percent.
Shares fell 4.20 percent to trade at $33.34 on Wednesday following the news.
The Dallas, Texas-based company said the investment plan – Project Velocity IP (VIP) – expands its high-potential growth platforms, helping drive continued increases in revenues from existing and new products and services, and earnings per share (EPS).
AT&T said it expects EPS will grow in the mid-single-digit or better range during the investment period, with an opportunity for stronger growth going forward.
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The company expects its growth drivers — wireless, wireline data and managed IT services — will consist 90 percent of total revenues by 2016, up from about 80 percent.
"Revenues in our key growth areas — wireless data, U-verse and strategic business services — are all growing at a strong double-digit rate," said AT&T CEO Randall Stephenson. "Project VIP expands our potential in these key platforms and makes them available to many more customers."
AT&T intends to expand its 4G LTE network to cover 300 million people in the United States by year-end 2014, up from its current plans to deploy 4G LTE to about 250 million people by year-end 2013.
In addition, the company plans to buy additional wireless spectrum to support its 4G LTE network. AT&T has acquired spectrum through more than 40 spectrum deals this year, with some pending regulatory review.
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Further, the company plans to enhance its wireline IP network to 57 million or 75 percent of all customer locations in its wireline service area by year-end 2015.
Meanwhile, AT&T raised the quarterly dividend rate to $0.45 a share from $0.44, an increase to $1.80 from $1.76 a share on an annualized basis. The dividend will be payable on Feb. 1, 2013, to common stockholders of record on Jan. 10, 2013.