AT&T confirms smaller 2015 capex

As expected, management at AT&T (NYSE:T) said on January 27 during its review of fiscal fourth quarter and full-year results that they expect to spend about $18 billion for capital expenditures (capex) in 2015. If the forecast holds, the total would represent slightly more than a $3 billion decline from the $21.4 billion spent in 2014.

The global Tier 1 service provider had signaled late last year that it expected to pare its capex this year. The company cited the near completion of its Project VIP effort – which includes connecting buildings to its fiber-optic network as well as expansion of its fiber-to-the-home (FTTH) infrastructure – as the reason for the capex pull back.

While most observers expect the majority of the capex to go toward wireless infrastructure improvements -- particularly considering the company's recent acquisitions of Iusacell and Nextel Mexico -- the fact that the company lost 51,000 wireline broadband subscribers in its recently concluded fourth quarter (excluding the Connecticut assets sold to Frontier) would indicate that high-speed broadband investments may continue to be emphasized as well. The company has had success with its high-speed U-verse Internet and video packages -- it gained 405,000 U-verse high speed Internet subscribers in the fourth quarter, for a total of 12.2 million, and added 73,000 U-verse TV subscribers in the quarter, for a total of nearly 6 million. It would seem that converting as many existing broadband customers to these higher-tier services would be a priority.

At year-end, U-verse TV penetration was about 22% and U-verse broadband penetration was about 21%.

However, the company has announced that it plans to hold off on its 1-Gbps U-verse with GigaPower FTTH market expansion efforts until the current Net Neutrality storm blows over. Yet it also faces expanded competition from Google Fiber.

Similarly to Verizon, AT&T reported a GAAP loss for the fourth quarter of loss of $0.77 per share due to "non-cash charges," versus $1.31 diluted EPS in the year-ago quarter. However, excluding "significant items," EPS was $0.55 up 3.8% from the year-ago non-GAAP EPS of $0.53. Quarterly revenues were $34.4 billion, also up 3.8 percent versus 4Q13 and up 4.5% when adjusting for the sale of the Connecticut assets.

For the full year, AT&T reported revenues of $132.4 billion, better than 2013's $128.8 billion. When excluding the divested Connecticut properties, revenues were up 3.1%, AT&T says.

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