American Telephone & Telegraph Co. plans to devote a "large part" of its $11.4 billion construction program this year to installation of new electronic switching systems, chairman John D. deButts said yesterday.
He told the Washington Society of Investment Analysts that by the end of last year close to 20 per cent of Bell System telephones - nearly 23 million - were served by the new technology, which replaces less efficient electromechanical systems that switch telephone calls.
"This year, we are installing these systems at a rate of about one every working day," he said. And the Bell System also has started to use long-distance electronic switching offices capable of handling seven times the telephone traffic of tolder equipment, deButts told the local analysts.
Of the total spending this year, AT&T plans to generate 80 per cent internally and will need to raise about $2.5 to $3 billion from public investors. DeButts said AT&-T itself plans no equity offerings during 1977. All debt and common stock offerings planned are by operating subsidiaries - local telephone companies across the nation.
The AT&T chief noted that his firm already sells $500 million of new stock a year to current investors through a dividend reinvestment plan and $200 million a year to a Bell System savings plan.
DeButts also defended in strong terms his company's recent string of three quarters during which profits exceeded $1 billion each - the first such earnings volume by any American business. (See PHONE, C2, Col. 4) (PHONE, From C1)
"With all due respect to my friends in the media," the stories about AT&T's $1 billion quarterly profits were "blown completely out of the water," deButts asserted.
He said such a figure should be related to %72 billion of capital invested by individuals and institutions in AT&T securities and to the giant communications firm's 1976 return on capital of 8.94 per cent and return on equity of 11.2 per cent.
The $1-billion-per-quarter profit represents a return of less than the 9.5-10 per cent level permitted AT&T by the Federal Communications Commission, de Butts added.
But state commissions in New Jersey and South Carolina have denied local rate increases on the basis of reports about AT&T's profit record, according to deButts.
These have been reprecussions from a basic "misunderstanding of the economics of business" that must be shouldered primarily by America's business community and not the media, however, the AT&T chairman said, adding, "We've done a lousy job."
In response to a question, deButts said it is "conceivable" that AT&T will ask the FCC this year to approve higher long-distance rates. A proposal to begin charging for long-distance information calls would not be implemented until all states approve information call charges locally, he added.
DeButts also had some unusual advice for businesses that are offered specialized long-distance telecommunications services that cost less than those provided by AT&T, in a new era of competition. The switch ought to be made "if he can save money," deButts asserted.
The AT&T chairman, who had testified Monday at the opening of Senate hearings on ocmmunication policy that could lead to rewriting the 1934 Communications Act, said yesterday he does not expect a "quick consensus."
He also said an "especially troubling aspect" of the current debate over growing competition to AT&T "is that the Bell System and the Federal Communications Commission appear to be pitted in the role of antagonists."
On Monday, deButts and FCC chairman Richard E. Wiley took opposite positions on future policy, with the AT&T officer warning of higher residential rates in the face of FCC-fostered competition, and Wiley stating that AT&T had shown no evidence that residential rates now are subsidized.