AT&T to spend $8B on LTE expansion after T-Mobile deal

AT&T (NYSE:T) CEO Randall Stephenson said that if the company's proposed $39 billion purchase of T-Mobile USA is approved by regulators, AT&T will spend $8 billion over three years to expand LTE coverage to 97 percent of Americans.

AT&T (NYSE:T) CEO Randall Stephenson


In a wide-ranging interview at the Sanford C. Bernstein & Co. Strategic Decisions Conference, Stephenson talked about the acquisition, AT&T's efforts to woo technology companies to support the deal, the company's LTE deployment and the future of the industry.

Stephenson said AT&T thinks it will be at least six years before the FCC can get a significant amount of spectrum into the market, which is why AT&T felt compelled to make the T-Mobile deal. He said AT&T's move to LTE is more about spectral efficiency and lower latency than simply boosting transmission speeds. He said AT&T is deploying 2,000 cell sites this year in its efforts to upgrade to the faster HSPA+ network technology.

And though AT&T's LTE deployment trails significantly behind that of Verizon Wireless (NYSE:VZ), Stephenson said AT&T is not worried about lagging Verizon. He said the two companies will be compete as fiercely over data speeds and network claims on LTE as they have on 3G. "That's going to be the fight," he said. "It's going to be the boxing match."

AT&T has said it will launch LTE in five markets this summer, and cover 70 million POPs by year-end.

The AT&T exec also reiterated the company's position that it has not seen any real surprises in terms of opposition to the T-Mobile deal, and that the inquiries it has received from the FCC and Department of Justice have been in line with the company's expectations. Stephenson said that a number of state governors are supporting the deal because it will help bring mobile broadband to rural parts of the country, and also noted that numerous labor unions, including the Communications Workers of America and AFL-CIO, support the transaction.

AT&T executives have been hitting the road of late to drum up support for the deal from the technology industry--Microsoft (NASDAQ:MSFT) has thrown its support behind the deal, and Stephenson predicted more would follow, though he declined to name names. "You're going to see a number of people in the high-tech community support this," he said. "Our conversations have been productive."

Finally, Stephenson said he thinks there is significant room to grow in terms of smartphone penetration, and that tablets are still nascent products. He said AT&T is working with Ford Motor Co. and BMW on connected car solutions, and also said he felt connected home and wireless healthcare applications will provide new revenue opportunities in the years ahead.

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