AT&T to spend less than Verizon on C-band 5G rollout

AT&T will not match rival Verizon’s monster spend on the rollout of 5G infrastructure using its recently-acquired C-band spectrum.

The US operator has earmarked capex of between $6 billion and $8 billion over the next three-to-four years for C-band rollout, which is at least $2 billion less than the figure Verizon shared at its investor day last week. Furthermore, while Verizon was talking about incremental spend, AT&T says the sum is already factored into its forecasts.

The telco’s guidance for 2021 is unchanged, including predicted capital expenditures in the $18 billion range. It expects the bulk of its C-band investment to come in the 2022-2024 period, since the spectrum is immediately available for use; some will be freed up by the end of this year and some later on.

Nonetheless, it appears that we’re not talking a big increase in capex from 2022 onwards either.

Speaking at AT&T’s investor day on Friday, at which it announced its spending plans for the C-band alongside growth targets for HBO Max and fibre, Jeff McElfresh, chief executive of AT&T Communications, reminded attendees that the telco hiked mobile network investments in recent years to cover the deployment of its first responder network FirstNet. “As that programme begins to enter its final stages, we’re shifting our investments in wireless to more densification, which includes the deployment of our C-band spectrum,” McElfresh said. “So it will be an allocation shift within our current portfolio.”

Speaking of densification, that’s something Verizon insists it will not have to do. “Our network is already very dense,” said Verizon CTO Kyle Malady. The telco already has good overlap between cell sites and C-band fits with what is already there, he said, although there is the possibility of some infill in rural areas over time.

Verizon’s projected annual capital expenditure for this year is very similar to AT&T’s at $17.5 billion-$18.5 billion, although, as we have already noted, its planned $10 billion C-band rollout spend will come on top of that figure.

Not to be outdone by its higher-spending competitors, in spectrum auction terms at least, T-Mobile US also presented its latest 5G plan at an analyst day last week. Its message was wordier and less straightfoward than those of Verizon and AT&T, but essentially it is aiming to complete its 5G rollout before the other two have access to all their C-band frequencies and it expects to realise greater synergies from the Sprint merger than it had previously anticipated…which is enabling the firm to lower its capex forecast for the coming years.

T-Mobile excitedly announced that it expects the total net present value of merger synergies to be more than $70 billion, an increase of more than 60% from the predicted figure of $43 billion it shared when the deal went through in April. Network build will be fuelled by those synergies, the telco said. As such, it has reduced its capex guidance for 2023 to $9 billion-$10 billion, having previously guided for $9 billion-$12 billion annually over then next three-to-four years. At the same time it has upped its revenue, earnings and free cash flow expectations for the same period.

“T-Mobile’s 5G network build is moving at an unmatched pace, with the company targeting completion by the end of 2023 – just in time for others to get access to their C-band spectrum,” it said, in a statement. “Competitors will have to spend billions of dollars over years to deploy the spectrum they received, all while T-Mobile has been actively putting its multi-layer spectrum portfolio to work to create the densest and broadest network to benefit American consumers and businesses.”

Let’s not kid ourselves though; T-Mobile is not doing this on the cheap.

The big three have plenty in common, including a renewed focus on bringing in home broadband and business customers alongside 5G consumer accounts, for example. They are also all spending big money.

While Verizon’s mega-spend is getting all the attention, all three are ploughing a serious amount of money into 5G one way or another. AT&T’s total auction spend of $27.4 billion may be lower than Verizon’s oft-mentioned $52.9 billion bill, but it’s far from being small potatoes. And while T-Mobile may be crowing about needing to spend less than the other two on C-band spectrum and 5G rollout, but let’s not forget that it shelled out $26 billion for Sprint just last year, whose network it is now able to repurpose for 5G.

All three telcos have a lot riding on 5G, and that’s an understatement.