AT&T Confirms Minor Capex Cuts

CFO Rick Lindner has confirmed some of the recent speculation that AT&T Inc. (NYSE: T) would cut some capital expenditures today -- but it's not U-verse that's being trimmed. (See Report: AT&T Slowing on U-verse.)

"We are not going to slow down in areas we feel are important to future growth," Linder said on AT&T's earnings call this morning. "That applies to U-verse growth and our wireless builds." AT&T reported today that it has about 550,000 U-verse IPTV subscribers and expects to have more than 1 million by the end of this year. (See AT&T Hits 550K IPTV Subs.)

AT&T still expects capital spending to be in the mid-teens as a percentage of revenue. But it's likely to report "spending in the second half that is similar but probably in a slightly lower level" when compared to the first half of the year, Lindner said. That means a reduction in the range of "hundred of millions of dollars and not billions of dollars."

Lindner didn't specify which areas would see capex cuts though.

AT&T's profits remained strong despite rough macroeconomic conditions. But Lindner noted that the economy is affecting some areas, like broadband.

"We're seeing some impacts, frankly, where we have customers who are disconnecting broadband and indicating that they're not going to a competitor." His interpretation: These customers are so squeezed financially that they're dropping broadband in favor of using the Internet exclusively at work or using a free wireless connection.

In December, AT&T CEO Randall Stephenson had suggested consumer markets were weakening, as AT&T had had to disconnect some customers. (See Whoa Mama Bell!)

Lindner's remarks didn't rattle investors the way Stephenson's did, though. AT&T's stock was up $1.55 (4.9%) at $33.37 in midday trading.

— Raymond McConville, Reporter, Light Reading

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