AT&T CFO: We're the Capacity Kings
AT&T may have been nudged into offering unlimited wireless plans by its competitors, but the company intends to parlay what it sees as its unique network spectrum and capacity advantages to best that competition, CFO John Stephens said today in an investor presentation to Deutsche Bank.
Stephens also alluded to a potential victory in the bidding to build FirstNet as part of an overall AT&T strategy to win in a "capacity-based competition" that develops as unlimited data plans take hold. AT&T already has 40MHz of unused spectrum from the AWS 3 and WCS auctions, he said, and could potentially gain another 20MHz in the 700MHz D band -- along with funding for network construction -- if it wins the FirstNet bid as expected. (See AT&T Has FirstNet Public Safety Deal in the Bag – Sources.)
"We have 40MHz and we are hopeful to have 60MHz of service and a source to help supplement the cost to help implement and put those into service," Stephens said in his presentation, which was also webcast. "We feel very comfortable with the competitive environment with regards to a capacity-based competition -- it's not the one we chose but if we are going to go there, we feel we are best positioned, significantly differentiated [from] the other three, with our current inventory of spectrum and capacity."
Stephens called First Net a unique opportunity, and one AT&T can leverage as a national platform for its Internet of Things, Smart Cities and other efforts, all of which become new revenue-generators. "It allows you to build a new national network on a new band, and it also gives you the funding to do that," he said. Being able to leverage that as a national platform gives AT&T and its customers "a dramatic advantage," he said.
And a FirstNet win is not all AT&T is hoping to get from Washington. Under the Trump Administration, the carrier is expecting both a much more favorable regulatory environment and tax reform that will lower the corporate tax rate and boost investment domestically. The icing on the cake would be approval of its Time Warner acquisition this year, and Stephens is hopeful there, as well.
He credited new FCC Chair Ajit Pai with already moving to roll back rulings or pending moves regarding business data centers and consumer privacy protections, and said he expected Pai to continue backing an approach that encourages investment.
Tax reform would be an even more significant move in that direction and one that could significant impact AT&T's revenues, Stephens said.
"When you look at US economy for the last decade, one thing has been woefully absent and that is significant fixed investment," he commented. "One of the reasons is, you can put [investment dollars] somewhere else and pay 20% in taxes or you can put it in the US and pay 40% taxes, when you consider most of our state tax rates. And that differential makes us non-competitive."
A reduction in corporate tax rates to 20%, which Trump has said he'll support, "will create an environment where everybody else invests in the United States, and being a US-centric provider of services," AT&T would benefit by providing business services of all types to new factories and other operations, he said. "They are all going to need our products and services."
— Carol Wilson, Editor-at-Large, Light Reading