Imagine a time where copper wiring is no longer used at all in the telecommunications industry - and the technology devices of our world are totally reliant upon a completely wireless network. This is a dream that AT&T is currently working to make a reality.
On Wednesday AT&T (T) announced that its company was going to embark on a project that will change the way they provide services to its customers. The cost of this project is currently quoted to be around $14 billion dollars over the next three years. In making this move AT&T could potentially increase the value of their stock at the end of the three years.
In my opinion, acquiring AT&T stock now at the ground level of this capital project could really have the potential to pay off for the investor in three years. At the end of the three years AT&T will have acquired the following: 300 million 4G LTE customers by the end of 2014, 118 MHz of Spectrum nationwide (which expands the AT&T network to virtually anywhere their customers go), and the company also plans to support the reliability of their services by using small cell technology which enhances the wireless network through call quality and connectivity.
Through this project AT&T also plans to throw approximately $6 billion (of the $14 billion projected to be spent) towards the expansion of their Wireline IP network. The benefits within this project for AT&T and their investors are: a total of 57 million customers using U-verse by the end of 2015, 24 million more customers who will be using the U-verse IPDSLAM network by the end of 2015 and speed rate upgrades for both U-verse and U-verse IPDSLAM.
The projects that AT&T is about to undertake are likely to increase the wealth of investors. AT&T has speculated that EPS share are expected to rise to the single digit middle range. The money that AT&T will generate from this project would greatly enhance the overall position of the company. In addition, AT&T has made tremendous efforts in paying down debts and solidifying their financials.
I decided to research AT&T's competitors to see if they are taking on similar projects that would help boost the overall value of their stocks as well. The competitors that I looked at were Verizon (VZ), Sprint (S), T-Mobile, Metro PCS (PCS) and Leap Wireless (LEAP). After all, the point of AT&T to put so much money into phasing out the use of copper wire and expanding their wireless services is so that they remain the stronger competitor in their field. In my research I found that AT&T is taking on one of the bigger capital projects compared to their competition.
Verizon is also looking to expand its 4G LTE line but through its products which will have Windows 8 capability and not through the expansion that AT&T is actively seeking to do. The new 4GE LTE products that will be available from Verizon starting Thanksgiving Day will provide more options to their current customers as far as products but may not expand or attract new customers like the plans of AT&T are likely to do.
Sprint is in the process of acquiring US Cellular (USM). Provided that the merger is approved by the Federal Communications Commission, Sprint could significantly increase the value of their stock which could give AT&T something to be concerned about. At the moment, Sprint hasn't provided any more information about the progress of this acquisition.
T-Mobile was not merged with AT&T. T-Mobile is owned by Deutsche Telekom AG (DTE). As of right now, there are not any major projects that T-Mobile is choosing to take on at this time. In my opinion, T-Mobile may not be a real threat stock wise to AT&T at this time.
Metro PCS Communications will be launching their 4G LTE devices with a technology called joyn. This technology will allow Metro PCS users to access of the applications on their phone simultaneously and transitionally without having to open and close applications. In my research I was not able to find out how much money Metro PCS has spent so far for this new technology but should it become popular, this could be a tremendous boost for their stocks. However, I still expect AT&T to still expect a better return on their project investment over all of the companies mentioned so far.
US Cellular at this time hasn't officially announced any major projects for this year so far that could potentially increase their stock value. U.S. Cellular is the 7th largest publicly traded cell phone provider in the U.S. However, the advancements that AT&T is planning to implement will still keep them highly competitive even against U.S. Cellular.
Overall, this massive project expansion is going to take AT&T incredibly far when compared to their competitors inside their industry. It will also allow for them to give cable companies who provide internet services to their customers a run for their money. The speed that wireless connectivity allows far outpaces those services that use copper wiring. My advice to all investors now is the time to buy AT&T stock if you have not and acquire more if you already have it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.