AT&T announces Project Velocity IP capex plans

AT&T has unveiled Project Velocity IP (Project VIP), a $14 billion program that aims to improve its wireless and wireline IP broadband networks. The program is expected to boost the service provider’s overall capital expenditures (capex) to $22 billion for each of the next three years.

The company’s 4G wireless roll out will receive $8 billion of the $14 billion total. Among the goals of the wireline efforts is to connect 50% of the multi-tenant business buildings in its wireline service area with fiber.

AT&T expects its 4G LTE network to cover 300 million people in the United States by the end of 2014, and about 250 million people by the end of next year. Meanwhile, the wireline investment will expand its IP network to 57 million customer locations (including consumers and small businesses), which is 75 percent of all customer locations in its wireline service area, by year-end 2015. The company plans to use its 4G LTE capabilities to deliver high-speed broadband services in areas where it believes it is not “economically feasible” to upgrade its wireline network to the level local competition will require.

“This is a major commitment to invest in 21st Century communications infrastructure for the United States and bring high-speed Internet connectivity — 4G LTE mobile and wireline IP broadband — to millions more Americans,” said Randall Stephenson, AT&T chairman and CEO, via a press statement. “We have the opportunity to improve AT&T's revenue growth and cost structure for years to come, and create substantial value for shareowners.

“Revenues in our key growth areas — wireless data, U-verse, and strategic business services — are all growing at a strong double-digit rate,” he continued. “Project VIP expands our potential in these key platforms and makes them available to many more customers,” Stephenson said. “With our strong balance sheet, these capital investments are manageable. We are very confident in our ability to execute this plan. These are things we've done before – logical extensions of proven technologies and already successful businesses.”

To accomplish these goals, AT&T says it expects to increase its capital intensity to the high end of the mid-teens as a percentage of revenues in the next two years before returning to “normal levels” in 2015.