In what Chairman and CEO Randall Stephenson is calling "a major commitment to invest in 21st Century communications infrastructure," AT&T plans to invest $14 billion over the next three years to expand its wireless and wireline IP broadband networks in the United States to support high-speed Internet access and new mobile, app and cloud services.
Called Project Velocity IP, or VIP, the investment plan focuses on expanding its wireless reach by expanding its 4G LTE network, buying more spectrum and deploying small cell technologies. On the wireline side, it includes expanding its U-Verse services, upgrading speeds and extending fiber to multitenant buildings.
The efforts are expected to support AT&T's consumer initiatives around IP home security and automation, mobile premises solutions, mobile wallet and connected cars. With business customers, AT&T expects Project VIP to support four growth areas: strategic network services, cloud, security and mobility solutions.
AT&T is counting on the investment to drive revenue growth and projects wireless, wireline data and managed IT services will comprise 90 percent of total revenues by 2016, up from about 80 percent today.
“Revenues in our key growth areas — wireless data, U-verse and strategic business services — are all growing at a strong double-digit rate," Stephenson said in a press statement. "Project VIP expands our potential in these key platforms and makes them available to many more customers. With our strong balance sheet, these capital investments are manageable. We are very confident in our ability to execute this plan."
Over the last three years, the company has reduced its debt by approximately $9 billion, has refinanced $20 billion in debt, and reduced its cost of debt by 60 basis points.
A cornerstone of the plan is expanding the AT&T 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 AT&T's 22-state wireline service area, the company expects its 4G LTE network will cover 99 percent of all customer locations. In addition, AT&T plans to increase the density of its wireless network with the deployment of small cell technology, macro cells and additional distributed antenna systems.
The company also plans to by more spectrum. It this year, it has already done 40 deals -- some pending regulatory review. Between what the company already owns and transactions pending approval, AT&T expects to have about 118Mhz of spectrum nationwide.
On the wireline side, AT&T plans to expand to 57 million customer locations (consumer and small business) or 75 percent of all customer locations in its wireline service area by year-end 2015. As part of this, it will expand U-verse (TV, Internet, VoIP) customer location by more than one-third to 33 million by the end of 2015. It also will add a U-Verse IP DLSAM service, including high-speed Internet and VoIP to 24 million customers by the end of 2013.
Project VIP includes an upgrade for U-verse to speeds of up to 75MBps and for U-verse IPDSLAM to speeds of up to 45MBps, with plans for higher speeds in the future. AT&T plans to use its 4G wireless network to offer services to 25 percent of AT&T's wireline customer locations where it's currently not economically feasible to build a competitive IP wireline network. It also will expand its fiber network to reach an additional one million business customer locations – 50 percent of the multitenant business buildings in its wireline service area.