American Telephone & Telegraph Co., the nation's largest utility, plans to spend a record $12.5 billion for construction and new facilities next year, chairman John D. deButts said yesterday.
The new outlays will be about $1 billion, or 8.7 per cent, above spending by AT&T this year. That rate of growth in AT&T's construction budget is higher than the average new spending for plant and equipment planned by American business in the coming months.
"These are numbers that are hardly characteristic of a business that, having passed its centennial, might be assumed to have matured," deButts told the New York Society of Security Analysts.
At the same time, deButts renewed his warnings that decisions by the Federal Communications Commission are creating "unnecessary risks that are not in the interest of the public at large and put unneccessary burdens on many for a possible advantage to a few."
To curb these FCC actions, which generally have fostered new competition for AT&T in both equipment sales and lucrative intercity communications, deButts said ground rules must be developed to allow competitive pricing in some services "without jeopardizing" the national telephone system or lower residential and rural rates.
He referred specifically to a telephone industry proposal submitted to Congress last week, which competitors of AT&T have claimed would put them out of business by establishing new restrictions on intercity services as well as local connections to the national telephone network.
Regulated competition, deButts declared yesterday, "will inevitably have its consequences. In short, in the field of telecommunications, it may help some customers, hurt others."
The AT&T chief also vowed to fight "with all the skill and vigor we can summon," the Justice Department's antitrust suit against the Bell System. The suit seeks to break up the AT&T combine - a long lines division for intercity services, local operating subsidiaries, manufacturer Western Electric and research arm Bell Laboratories.
Last week, AT&T vice chairman William S. Cashel Jr. claimed that the antitrust case could cost his firm "a cool million" and involves about 3,000 persons, for pre-trial discovery proceedings alone.
One other points yesterday, deButts had these comments in his prepared remarks, which were made available in Washington:
AT&T probably will report record profits for the year 1977. Although deButts offered no formal forecast, he said "it now appears" earnings will be "even better" than the previous record of $3.83 billion ($6.05 a share) in 1976 on sales of $33 billion.
In the first nine months of 1977, AT&T earnings were $5.30 a share up 17 per cent from the previous year's pace for a return on equity of 12.6 per cent.
For the first three quarters of the year, AT&T added 4 million telephones for a total of 127 million, long distance message volume rose 9.5 per cent, and wide area telecommunications service (WATS) volume was up 25 per cent.
In various jurisdictions across the country this year, AT&T subsidiaries (such as Chesapeake & Potomac in the Washington area) received rate increases that will add about $750 million in new annual revenues.
About 75 per cent of this year's capital outlays as well as the projection spending for 1978 will be financed internally. This contrasts sharply will 1974, when AT&T went to the public markets for 40 per cent of its expansion capital needs. AT&T expects to gain some $900 million of equity this year from its dividend reinvestment, savings and employee stock ownership plans.
By the end of this year, AT&T expects to have 1,300 local electronic switching systems in operation as well as a dozen "super electronic switchers" that have three times the capacity for messages but cost two-thirds less to maintain and take up one-fourth the space of previous equipment.
Overall annual business volume has been growing at an average rate of 8 per cent over the past decade.
A competitor of AT&T for intercity communications services, meanwhile, took aim at the Bell System's support for the telephone industry proposal to Congress last week.C. Gus Graut, president of Southern Pacific Communications Co., said the proposal, would create an even larger legal monopoly for AT&T.
"This proposal would roll back the authorizations presently held by specialized common carriers such SP Communications and preclude it from providing two-thirds of our present services," Grant said.
He said SP is willing to explore the concept of an "access charge" to the national telephone system, if it can be demonstrated that such fees would insure adequate rural and residential services. "But we reject out of hand this latest proposal by Bell to restrict, if not totally eliminate, our needed services," he added.
In another development, International Telephone & Telegraph Corp. announced plans to import telephone devices from 90 countries, with prices ranging from $35 to $300, for retail sale in this country.
Martin H. Feinberg, head of ITT's consumer specialty products division, said the telephones represent models manufactured for the U.S. market and governments around the globe.
Models include a radio-telephone, recorder-telephone, a telephone with an alarm clock, a timer telephone to let users know how much time a call is taking and a security phone that connects users with police or emergency services.
ITT is planning to sell the devices across the nation and will set up 72 service offices, Feinberg said. Under new government policy, consumers no longer have to rent telephones from the local telephone company and may purchase their own equipment.