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AT&T (T) To Invest $14B To Expand Networks, Boosts Dividend; Shares Off

 November 07, 2012 09:35 AM

(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.

[Related -T-Mobile US Inc (NYSE:TMUS): AT&T Inc.(NYSE:T) Could Suffer In Wireless War]

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.

[Related -AT&T Inc. (NYSE:T): T-Mobile-Style Plans Should Drive Margins]

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.

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.

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