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When a company invests, it may be priming for growth or digging in for a fight. This week AT&T said it would put $22-billion in capital spending into its wireless and wireline networks in each of the next three years, $2-billion to $3-billion more than current levels. Optimism or fear?

AT&T says additional investment will allow its key products – 4G wireless, high-speed internet services, TV/voice/Internet bundles – to grow faster. Costs will be cut as more of the back end moves to a modern fibre network, and away from copper and circuit-switching. At the same time, AT&T says it will not roll back its aggressive share buyback plan despite the higher capital spend.

That sounds like spending to spur revenue growth – and to support the stock. Remember, though, that the U.S. wireless market may well turn nasty, and soon. Sprint's management has as much as said it will deploy capital contributed by SoftBank in part to compete more aggressively on price. Soon-to-be merged T-Mobile and MetroPCS will, in all likelihood, invest the savings from their tie-up to snag customers away from rivals.

If AT&T's strategy is defensive, it is cagey too. Its main competitor, Verizon, will have to think carefully before matching AT&T's increased investment levels. On a consolidated basis, Verizon will generate perhaps $33-billion in operating cash flow this year; capital spending will approach $16-billion. That appears to leave room for more spending.

But Vodafone owns 45 per cent of Verizon's wireless business, which generates most, perhaps all, of the Verizon group cash flow after capital expenditure. If Verizon wants to deploy this cash outside the wireless business – on wireline investments, dividends or buybacks – it must pay Vodafone its share first. Free of such constraints, AT&T has a structural advantage, and it has decided to press it.