AT&T

(T) - Get Report

didn't designate

AWE

as the symbol for its wireless tracking stock for nothing.

Not only is this highly anticipated IPO slated to be the nation's richest stock debut -- pegged at somewhere in the neighborhood of $9.3 billion to $11.5 billion -- but AT&T has said in regulatory filings that it will spend a staggering $7 billion of the proceeds on such things as building and acquiring more networks.

Investors bedazzled by wireless stocks and the promise of AT&T's brand on a nationwide service likely will run the stock up beyond next month's expected offering range of 26 to 32, investors say. Still, questions about the unit's insatiable thirst for capital investment, its growth rate and its valuation have some people on Wall Street looking to kick the tires first.

The Money Pit

The red flags begin with spending: AT&T wireless is a money pit, say wireless experts. Because it is mostly an older network, it requires massive upgrades to stay abreast of capacity demands. The wireless company lost $405 million last year on $7.6 billion in revenue. This year, AT&T has budgeted $4.1 billion for network-expansion costs, a figure that doesn't include probable acquisition of other companies or new spectrum.

"You are buying something that is sucking up a lot of capital and will suck up a lot more capital for at least the next three years," says one money manager who asked not to be named. This money manager is bullish on the wireless industry and does not hold any AT&T but holds

Alltel

(AT) - Get Report

shares.

A big but undisclosed chunk of AT&T's money will go to the introduction of

Project Angel

, a fixed-wireless technology used to beam phone service and high-speed Net access to receivers mounted on homes. Critics call the technology unproven and highly susceptible to standard suburban obstructions such as snow, fog, rain, trees, birds and any number of other things. To make matters more complicated, the Angel technology, which has garnered only a limited number of subscribers in Texas, requires a battery backup that AT&T has found

troublesome in its cable ventures.

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What Price Wireless?

Then there's the value question.

After a three-week IPO roadshow, AT&T's deal is expected to be priced on April 26 and debut on the following day. If the shares reach the 50 mark, as many observers expect, the wireless company will be valued at roughly $9,500 per subscriber, nearly equal to

Sprint PCS'

(PCS)

$9,800.

But consider this: Sprint PCS, the wireless tracker AT&T so wants to emulate, operates the nation's fastest-growing wireless service. AT&T doesn't.

AT&T wireless has 12.2 million subscribers, or 14% of the market, according to Mark Lowenstein, top wireless analyst at the

Yankee Group

. That's compared with 5.9 million subscribers, or 7%, of the market Sprint has gained in four years. (The Yankee Group consults to all the major wireless companies.)

But in terms of growth, AT&T is being rapidly outpaced by Sprint, which added more than a million subscribers last quarter, more than double the 440,000 people who signed on to AT&T.

"At comparable values, you'd take Sprint until the cows come home," says the fund manager, who holds no Sprint shares. "They have a network that is data-ready and they don't have that big capital expenditure ahead of them. Sprint will be data-ready a year to 18 months before AT&T."

Other possible warning signs include the continued brain drain from AT&T and its units. AT&T has reserved 10 million shares to attract and keep employees as talent continues to flock to rivals. Despite that, earlier this month, CEO Dan Hesse jumped ship for an

emerging wireless start-up,

TeraBeam

, leaving an estimated $50 million in stock on the table.

All the same, expect plenty of action next month to be in AWE.