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AT&T Q3: Taxes, FirstNet & '5G Evolution'

AT&T's CFO used part of Tuesday afternoon's third quarter earnings call to make an impassioned call for the Trump administration to continue to push to make its corporate tax plans into law.

The US federal corporate tax stands at 35%, the highest in the developed world, AT&T Inc. (NYSE: T) CFO John Stephens said on the call. President Trump wants to cut this rate to 20%.

"We continue to be strong advocates for tax reform," Stephens said. "This is a once in a generation opportunity...An opportunity that we can't let slip through our fingers."

Tax reform, he said, would enable AT&T to invest more in the US. This, in turn, would help drive job growth and bolster gross domestic product, the CFO said.

AT&T already has a major joint public-and-private wireless project underway, even in the absence of tax reform: the FirstNet nationwide first responders network. Stephens said AT&T has already invested around $200 million in FirstNet, "most of that to be reimbursed in the coming months." In March, AT&T won the $6.5 billion contract to deploy the LTE network. (See AT&T Formally Lands FirstNet Contract.)

Twenty-seven states and territories have so far opted in to FirstNet. "We look forward to completing the state opt-in process at the end of this year, Stephens said. Buildout is due to start early in 2018.

FirstNet is expected to help AT&T to deliver broadband to a targeted 50 million customer locations with fiber and wireless by 2020 "or thereabouts." This is because it can update its existing LTE equipment when it touches the tower for FirstNet deployment.

Stephens expects around 34 million premises to be covered by fiber, with wireless handling the rest. Although Stephens noted that the "5G Overbuild" will "frankly might cover much of the same locations."

By "5G" the CFO seemed to be refering -- initially at least -- to the LTE-Advanced network upgrades that AT&T is calling "5G Evolution." These will extend to 20 cities in the US by year's end, and "30 major cities later on" Stephens said. (See Surprise! AT&T Markets 4G Advances as '5G Evolution'.)

These are 4G upgrades, however, not using the forthcoming 3rd Generation Partnership Project (3GPP) NR specification. AT&T is testing millimeter wave on 39GHz, which could be used for 5G, but Stephens said he didn't expect infrastructure equipment to arrive until 2019 or after.

For the quarter, AT&T reported revenue of $39.67 billion, compared to $40.89 billion in the same quarter last year. Adjusted earnings per share were $0.74, flat with last year, but down a cent on Thomson Reuters analyst's expectations. Net income was $3 billion. The operator reported 3 million wireless net adds, 2.3 million in the US and the rest in Mexico, helped along by connected devices.

AT&T shares are down 1.34% at $34.38 in afterhours trading.

— Dan Jones, Mobile Editor, Light Reading

Phil_Britt 10/27/2017 | 8:09:36 AM
Re: Good times You're absolutely right about the tax situation, as Warren Buffet has noted. "Tax reform" is a huge misnomer. If mortgage deductoin (to name one) is limited or restricted, "tax reform" will be a tax increase for most.
mendyk 10/26/2017 | 3:30:04 PM
Re: Good times I agree that it's pointless to talk about taxes -- especially when the talk comes from people or entities that have real tax rates that are lower than the people who work at my local supermarket.
brooks7 10/26/2017 | 3:22:10 PM
Re: Good times  

Dennis/Kb,

I think you have it right and wrong.

1 - Essentially EVERY small business I talk to runs family expenses through their P&L.   That is tax cheating in another way, because people game systems.  Set up a system and people will game it.  We need to stop talking about it because as far as I can tell every business is somewhere between grey and black on the tax front.  Wait till you see some guy run his landscaping through the P&L because he has a home office. 

2 - If there is a tax code simplification, it has to come with a reduction in prices.  Less Work = Lower Cost = Lower Prices right?

seven

 

 

 

 
mendyk 10/26/2017 | 2:21:56 PM
Re: Good times If given the choice between keeping the tax rate at 35% with loopholes intact or lowering the rate to 20% and eliminating the loopholes, which option would the whiners take?
KBode 10/26/2017 | 2:11:54 PM
Re: Good times Yes, expecially when the myriad of the tricks already on the books allow them to pay virtually no taxes whatsoever across certain segments. Poor little daisies. 
Austin Idol 10/25/2017 | 10:29:00 AM
Re: Good times arghhhhhhhhh theee should make them walk the plank.........arghhhhhhhh
mendyk 10/25/2017 | 10:03:17 AM
Good times It's always fun to hear rich people -- and the multibillion-dollar corporate entities they represent -- cry poverty. The world is so unfair.
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