AT&T Inc. (T) has selected West Delray Beach area of Florida as one of the locations, where it has plans for a multi-year technology trial project to upgrade its network. The project pending for approval by the Federal Communications Commission will reportedly involve developing high-capacity fiber optic line in select locations.
We believe a successful trial of network upgrade will not only fortify infrastructural strength of the company but also remain accretive to its subscriber growth.
According to reports, AT&T spent over $2.75 billion between 2011 and 2013 on wireless and wireline upgrade in Florida. The company launched its LTE mobile broadband to over 20 communities, and rolled out advanced fiber-optic connections to additional 18,450 locations and advanced wired IP broadband connections to 25,050 locations in Florida. Also, the company upgraded over 100 cell sites to enhance service.
We believe such investments will improve the competitive position of the company against the likes of Verizon Communications Inc. (VZ), Sprint Corp. (S) and T-Mobile US, Inc. (TMUS) over the long term.
Further, these investments will provide AT&T with a high-potential growth platform for revenues and earnings. Moreover, to support network infrastructure, AT&T acquired 39 lower 700 MHz B Block spectrum licenses from Verizon for $1.9 billion in 2013.
In Jan 2014, the company also announced plans to acquire 49 AWS spectrum licenses from Aloha Partners II, L.P. The licenses cover nearly 50 million people in 14 states. The transaction is expected to be completed by the second half of the year. Moreover, in Dec 2013, AT&T completed its lease transaction for 9,000 towers and sale of approximately 600 towers to Crown Castle for $4.83 billion.
AT&T currently carries a Zacks Rank #3 (Hold).