According to the latest data from the research and consulting company GlobalData, COVID-19 has indeed slowed down capital investment in telecommunications networks in the United States, and AT&T is the main reason for this decline. Why?

GlobalData analyst John Byrne said: “In essence, AT&T is trying to balance two main priorities: capital expenditures to support wireless and broadband, and market expectations for free cash flow, and the latter to a certain extent determine how much dividends they will pay. The difficulties faced by AT&T’s WarnerMedia (warner media reorganized and laid off employees last year due to the COVID-19 epidemic), and the challenges faced by DirecTV (last month AT&T announced a $16 billion divestiture of the $48 billion DirecTV purchased), it really pulled down corporate EBITDA. In this case, capital expenditure is a fairly easy lever to keep free cash flow within the target.”

Earlier this month, AT&T’s outgoing chief financial officer John Stephens said that as of the end of last year, the company had reduced its debt by $30 billion.

Considering that Verizon invested an additional US$500 million in capital expenditures at the beginning of the pandemic in 2020 to cope with the increase in network traffic related to the coronavirus, and T-Mobile, after completing the acquisition of Sprint, launched a five-year network upgrade plan with $60 billion, AT&T’s capital expenditure reduction is noteworthy.

However, according to GlobalData’s forecast, 2021 looks to be very different.

Byrne said in a press release: “The good news is (especially for infrastructure providers) that capital expenditures may moderately increase in 2021. Based on the current operator budgets, GlobalData estimates that these US operators will increase by approximately 3.5% in spending, bringing the total back to US$68.4 billion, slightly lower than the US$70.1 billion before the 2019 pandemic.”

AT&T’s expenditures will be concentrated on 5G and fiber optic networks. In fact, AT&T plans to deploy FTTP (Fiber to the Home) to more than 3 million residential and commercial buildings across more than 90 metropolitan areas in 2021, and plans to expand this number to more than 4 million by 2022. In addition, AT&T will invest 6-8 billion US dollars between 2022 and 2024 to use its new mid-band C-band spectrum to provide 5G services to 70-75 million people by 2022 and 100 million people by early 2023 5G service.

Interestingly, AT&T stated that it also benefits from the ongoing cost reduction plan and hopes to cut its budget by $6 billion by 2023.