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Kentucky Gets AT&T Attention

Zacks Equity Research

Telecom giant AT&T Inc. (T) targets to upgrade its network capabilities and enhance the accessibility of next-generation broadband services in the state of Kentucky. For this action, the company will likely invest $600 million to $800 million from 2013 to 2015.

This investment forms part of the AT&T's Project Velocity IP (Internet Protocol) program that was set forth in November last year. Per the project, the company will put in $14 billion over the next three years to considerably expand the wireless (investment of $8 billion) and wireline (investment of $6 billion) IP broadband networks. With this scheme, AT&T hopes to satiate the growing demand among customers for high-speed Internet access and new mobile, applications and cloud services.

Keeping in view the development of the both wireline and wireless broadband availability in Kentucky, the Senate passed SB 88 to revise the state’s telecommunications laws and rules. The economic scenario of the territory is now expected to get a facelift, with top-speed Internet services that will support the growth of large and small businesses, widen health care facilities and render expansion on the academic front.

AT&T – the second largest provider of wireless services in North America after Verizon Communications Inc. (VZ) – intends to direct its investment in Kentucky toward bringing most of the people under the coverage of the 4G Long Term Evolution (:LTE) network as well as upgrade network quality and boost spectrum efficiency. On the wireline front, the company aims to promote U-verse (TV, Internet, Voice Over IP) services and spread out its fiber network.

The Project Velocity IP plan underlines AT&T’s efforts to serve customers efficiently and deliver superior services against other operators such as Sprint Nextel Corp. (S) and Telephone & Data Systems Inc. (TDS). We believe that this investment program will provide AT&T with a high-potential growth platform, leading to higher revenues and improved earnings in the months ahead.

AT&T currently has a Zacks Rank #3 (Hold) rating.

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