An AT&T (NYSE: T) executive confirmed that even though the telco has reduced its capex budget for 2015, it can still meet its fiber-to-the-premises (FTTP) rollout goals.
Lori Lee, EVP of Home Solutions for AT&T, told investors during the Morgan Stanley Technology, Media & Telecom Conference that "yes, it absolutely is" possible for AT&T to continue building out FTTP even with a 15 percent reduction in capital spending.
The service provider has set an ambitious rollout plan and is on track to bring FTTP services to up to 100 cities, including 21 new major metropolitan areas. After launching the 1 Gbps service initially in Austin in 2013, it is offering it in six major metros.
Lee said that the company is on track to reach 17 additional markets this year with the FTTP service. The service provider recently launched the service in Kansas City, where it will compete head on with both Google Fiber (NASDAQ: GOOG) and incumbent telco Consolidated Communications, which both offer similar services.
"We have a gigabit service there and we have the capability to do different speeds on the high end as well and we have announced that we'll be in 17 markets this year," Lee said. "So that's kind of the continued momentum of where we are on speed."
Reducing capex comes at a time when AT&T is nearing completion of its Project VIP initiative, which enabled it to bring U-verse broadband and its IP-based platforms to 57 million locations with a majority of those or about half being capable of receiving a TV service.
"We have a lot of objectives to continue to build out that network and we accomplished those and as a result of that you've seen things like our capex forecast come down," Lee said. "Last two were in the $21 billion range and this year we're in $18 billion."
Another key element of the Project VIP initiative on the wireline broadband side is that the service provider now offers a range of speeds from as low as 6 Mbps up to 75 Mbps in various markets.
"VIP originally went from six up to 24 and then last year we rolled out a 45 Meg service to about two-thirds of our footprint and then this year we're continuing to upgrade those fees on the continuum and we've announced 75 Meg that's rolling out," Lee said.
At the same time, Lee defended the movement in the fourth quarter to transition toward adding profitable customers. As a result, the telco only added 73,000 U-verse TV customers during the fourth quarter, which was down from the 194,000 added in the same period of 2013.
"Now that we have the majority of the penetration and migration of our base done, we wanted to really push profitability," Lee said. "And so we did that and we wanted to accomplish those two things but we wanted to do it while still being able to grow the business and take share. And that's what we did, you saw that play out in the fourth quarter and I think if you just looked at the underlying metrics, we were pretty successful with that."
Lee added that "we still grew the business 405,000 broadband, 72,000 TV. Our margins were up sequentially and we're still taking shares."
- listen to the webcast (reg. req.)
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