Summary
AT&T is correctly spending money on upgrading its 3G network with High Speed Packet Access 7.2.
Analysis
AT&T has no arguments from me. The company is making money with its existing 3G network and is spending money on upgrading the 3G network with High Speed Packet Access 7.2. The company’s actions are appropriate. You have to mine your asset for value for as long as you can; it is the fiscally responsible thing to do.
The question I have is: What impact will the $18 Billion investment have on the company’s LTE plans?
The fact is in early 2009, the iPhone 3GS issues were not a network congestion matter for AT&T Mobility. By late spring/early summer 2009 Apple and AT&T Mobilty announced there were network congestion issues. The only solution is to deploy High Speed Packet Access 7.2. By July 2009, AT&T Mobility declared it will upgrade the 3G network. Okay where is the money coming from? It has to come out of one pot to put in the 3G pot. The money did not appear out of thin air. The money could not have been just sitting there in cash reserves. AT&T is big but it cannot print the money.
Carriers do not just have cash lying around doing nothing and definitely not $18 Billion worth of cash. The money has to have been pulled from someplace. The question I have is what projects lost money. Did the LTE plan lose its budget? Have LTE plans been impacted by the upgrade plans? If not, then where did the money come from?
P.J. Louis consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
