Fitch lowers AT&T outlook over capital spending, stock buybacks


Telco to pour $14 billion into mobile network over next three years.

Fitch Ratings cut its outlook on AT&T Inc. to negative from stable, saying the telecommunications giant’s borrowing is likely to increase due to a rise in capital spending and a continuation of share buybacks.

Fitch affirmed AT&T’s A rating, which is five notches into investment grade.

AT&T said last week it plans to spend $14 billion over the next three years to expand its wireless and wired network, in a bet that data consumption will continue to grow in coming years.

The telecommunications giant had considered selling all or part of its 22-state wireline business, but it determined that investing in the operations was a better option for several reasons, including the regulatory hurdles of divesting such assets. The company is expanding plans for its next-generation LTE wireless network and will invest to increase its U-verse Internet and TV service.

Although Fitch expressed concern about the company’s increased leverage, it added that the higher capital spending should strengthen the company’s competitive position.

Fitch’s move comes after Moody’s Investors Service placed AT&T’s rating on review for a potential downgrade over the stepped-up spending. Moody’s rates AT&T at A2, at the same level as Fitch’s rating.

Shares were down 26 cents at $33.69. The stock is up 11% so far this year.