AT&T to Tighten Purse Strings

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The rumor circulating for the past few months was that AT&T had cut back the spending for their wireless networks; however, this was never confirmed. Some companies saw a little pull back from AT&T, while others didn’t see any change. Jennifer Fritzsche, Senior Analyst at Wells Fargo, reported that AT&T announced they would cut spending in 2015. They will likely spend $18 billion in 2015, down from $21 billion in 2014. This bit of news might alarm the members of the tower industry, but Fritzsche and her team believe that AT&T will continue to spend on capacity and improving the overall wireless network experience for its customers. “Also keep in mind that a major part of AT&T’s future LTE strategy is the deployment of its 30MHz WCS (2.3 GHZ),” Fitzsche notes. “AT&T has not spent on this in a meaningful way and the ecosystem has yet to be developed. Also, we expect AT&T to participate in both the AWS-3 and television repacking incentive auction (expected in 2016 – where AT&T has committed $9B). While more spectrum is a good thing for a carrier’s capacity, tower lease amendments are typically needed to be able to utilize this spectrum. Finally, while we would expect both wireless and wireline will be down in absolute dollars, we believe it will be hard for AT&T to materially slow in wireless when its largest competitor continues to spend at an aggressive clip. Recall, just last week Verizon’s CEO noted that it ‘hopes’ capex does not decline in absolute dollars as that would signify limited growth opportunities to invest in. We also note that the spending slowdown AT&T may experience in the US may be somewhat offset by additional spend it makes in Mexico through its announced Iusacell and its plans.”

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