A recent NY Times article highlighted how increasing data usage (text messages, internet browsing and apps) on iPhones is causing problems for the AT&T network. Newer iPhone models such as the iPhone 3G and 3GS have led to more data consumption as users take advantage of the phone’s higher mobile data speeds. As a result of the increasing data strain on the AT&T network, some iPhone users in dense metropolitan areas like New York and San Francisco experience delays in sending and receiving text messages, browsing the internet from their phone and using data intensive iPhone apps.
AT&T has indicated that it will be spending more money (capital expenditures) on network upgrades and expansions to support the increasing data usage. The company is particularly concerned about what will happen in 2010 when AT&T’s iPhone exclusivity expires. AT&T customers dissatisfied with the network speed may be lured to the company’s competitors which will be able to offer iPhones as well.
We estimate that AT&T will spend $4.9 billion (or 15% of it’s mobile business gross profits) on capital expenditures for its mobile network in 2009. Within AT&T’s content on our platform, you can see how AT&T’s stock would be impacted if AT&T’s Mobile CapEx were to increase due to greater investments to support rising data usage.
