U.S. telecom giant AT&T (NYSE: T) decided to spread a little cheer ahead of the holidays today, with an upbeat business outlook at its New York analysts conference. Thanks to strong operations across its business segments, the company announced a dividend increase of 12.7%, to $1.60 per share annually. Along with the boosted cash payout, it also authorized a 400-million-share repurchase plan, which it expects to complete by the end of 2009.
AT&T expects wireless revenue to continue growing at a rate in the mid-teens, as more users sign up for service and opt for more wireless data offerings. The growth in wireless is currently fueled by two main engines -- broadband upgrades to AT&T's wireless network, and its exclusive offering of the Apple (Nasdaq: AAPL) iPhone.
The company also announced a major expansion of its residential broadband video offering, called U-verse. Rollouts of the fiber-optic service have been dogged by delays so far, so AT&T changed course and ratcheted up deployment plans, with the goal of having more than a million subscribers by the end of 2008.
It also hopes to have 30 million residences connected by the end of 2010, generating a multibillion-dollar revenue stream. Rumors had been circulating over the past few months that AT&T would acquire EchoStar (Nasdaq: DISH), but the renewed focus on its own broadband offering seems to confirm that the deal is off the table at this point.
AT&T's wireless division head, Ralph de la Vega, also commented on the recent decision by Verizon Wireless -- a joint venture between Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD) -- to open its network. De la Vega noted that AT&T's network technology already allows a customer to swap their Subscriber Identity Module (SIM) into different phones, making its network already "open."
But this posturing completely misses the mark on the open-network debate. While the technologies deployed by AT&T and Deutsche Telekom's (NYSE: DT) T-Mobile do have this advantage over Verizon and Sprint Nextel (NYSE: S), open access is about far more than just device portability. Consumers don't want restrictions on hardware or software applications used on devices, and all carriers are guilty of that.
False comments notwithstanding, investors cheered the outlook, and shares soared more than 7% in morning trading. If AT&T can make good on its goals, there will doubtless be more goodwill in years to come.
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