AT&T to boost annual spending 16 percent to $22 billion

Wed Nov 7, 2012 6:10pm EST
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By Sinead Carew

(Reuters) - AT&T Inc will boost capital spending by about 16 percent to $22 billion a year for the next three years to upgrade its wireless and wireline networks, the company said on Wednesday.

Its shares fell more than 3 percent after the news.

Rival Verizon Communications Inc is ahead in high-speed mobile services, and AT&T also must improve rural phone lines, comprised of outdated copper technology.

The company said it hopes the investments will boost revenue growth by allowing it to chase new opportunities such as adding wireless connections to cars and home security.

AT&T said upgrading its wireline network was more attractive than carving off the business or divesting parts of the network. Previously, it said it was considering selling some rural phone lines.

"This gives us the opportunity to improve our top-line growth and change our cost structure," Chief Executive Randall Stephenson told analysts at an AT&T event in New York.

Investors worried about the spending hike from AT&T's 2012 capital budget for $19 billion to $20 billion, although the company vowed to come in at the low end of the range this year.

"It's a big number and it's not just for one year," Hudson Square Research analyst Todd Rethemeier said.   Continued...

Reflections are seen in the window of an AT&T store in New York March 21, 2011. REUTERS/Brendan McDermid