AT&T, Verizon Confident on Growth Despite Economy, Plan LTE Rollout
Major telcos like AT&T and Verizon aren’t seeing a major impact from the nation’s economic trouble, despite the recent stock market swoon and U.S. credit downgrade, executives said. Verizon Chief Financial Officer Fran Shammo weighed in at the Oppenheimer investor conference in Boston Wednesday on the ongoing union workers strike, emphasizing the need to change the company’s cost structure to remain competitive.
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AT&T’s credit ratings remain high and “we anticipate we will continue to have access to the debt markets,” said a spokeswoman. She said company increased its guidance for full-year 2011 capital expenditures from the low- to mid-$19 billion range to the $20 billion range. And Verizon isn’t seeing any impact from the sour economy, Shammo said. Enterprise customers aren’t feeling the pressure, though they are focusing their spending on cost-saving solutions, he said. Small businesses might be under pressure and they're a focus for Verizon, he said. Many telecom and tech shares lost between 4 and 6 percent of their value Monday and were still slightly down Tuesday and Wednesday.
Senior Vice President Peter Ritcher said AT&T doesn’t expect to offer its first LTE-enabled smartphone until close to the end of 2011. The carrier is on track to start LTE service in five markets this summer, and expects to cover 15 markets and 70 million users next year, he said. He emphasized the carrier would rather continue to boost its 3G networks with enhanced backhaul while it waits for LTE to mature. With the start of LTE service, Verizon is seeing more demand for tablet devices and expects new and enhanced devices to come to market, Shammo said. He expects companies to start to invest more in tablets than desktops. Schools and universities are opportunities in the consumer tablet market, he said. As more customers use LTE devices and as the amount of video and other multimedia content grows, more customers will move to Verizon’s higher-priced $50 and $80 monthly data usage tiers, he said. Tiered pricing is expected to become more and more important, he said.
Shammo reiterated Verizon’s stance that its cost structure needs to change for the legacy wireline business. A strike by union workers at Verizon continued Wednesday. WTAE television in Pittsburgh reported the telco sought an injunction to prevent what it termed unlawful strike activities. The injunction was granted, the station said, preventing activities such as blocking entrances. The station reported sheriff’s deputies escorted several people into the Verizon headquarters building there. “We fully expect that union members will respect and follow the law,” CWA said late Tuesday. “Our unions do not condone violence in any form,” it said. “Safety is paramount, and that’s why we're also calling on Verizon to make sure that our members on the picket lines aren’t hurt by replacement workers and management while the strike continues.”
Verizon doesn’t favor or oppose the AT&T/T-Mobile transaction, Shammo said: “We believe the industry does need some consolidation, but it has to be consolidation under the right terms.” If AT&T does buy T-Mobile, “we need to make sure it goes through without regulation,” he said. Smaller carriers need to become stronger and gain more scale, he said. In terms of consolidation at the lower end of the market, Shammo said he would like to see such smaller companies come up with solutions on their own rather having Verizon try to buy a smaller carrier.