Re: Tax cut != capexI think there is this massive disconnect around the value of a tax break as it relates to the deployment of capital.
Essentially, a Tax Cut adds money to the company below the EBITDA line. It doesn't change the operating conditions in the slightest.
The idea of a tax cut to feed CAPEX would be that the company would take the extra money and deploy it. However, this is only one of a multitude of choices including: Debt Reduction, Stock Buybacks, and Dividend Increases.
The one thing I reject is that these companies are at the point where they don't have enough projects that generate a positive ROI. It is HOW positive the ROI of most of them are. Note: A Tax Cut does not impact ROI calculations at all because they are done (in general)above the EBITDA line. You can know the depreciation of the equipment - if you can figure out the tax treatement (which is changing in some ways as part of the bill). But the rest of it I, T and A have little or no direct impact from an individual deployment.
As to AT&Ts claim. It can not be proven. They could put it out to help in the press, but I have no idea what projects constitute that $1B. I note the changes from original press at the Carrier Plant in Indiana. I think any notion that there is direct linkage is PR and not reality.
Re: Tax cut != capexAlternate hypothesis: the tax cut gives them cover to do what they were going to do anyway, while not upsetting Wall St. And AT&T would not be the first corporation to give Trump credit for things he had nothing to do with.
Tax Cuts / Whacking Net NeutralityIt won't show up in year one but there will be incremental cap ex 3-5 years out. These companies are giant freighters and don't move on a dime. But the author easily makes his political leanings clear.
Tax cut != capexHis candor is much appreciated. The capex budget was decided long before the tax cut bill. These companies work on 3-5 year planning cycles. There is no backlog of "shovel-ready projects" waiting for cash flow to free up.
I still expect VZ capex to trend upward over the next few years, for OneFiber and 5G roll-out. Because it tracks with their announced strategy. Not because of a tax bill.
Essentially, a Tax Cut adds money to the company below the EBITDA line. It doesn't change the operating conditions in the slightest.
The idea of a tax cut to feed CAPEX would be that the company would take the extra money and deploy it. However, this is only one of a multitude of choices including: Debt Reduction, Stock Buybacks, and Dividend Increases.
The one thing I reject is that these companies are at the point where they don't have enough projects that generate a positive ROI. It is HOW positive the ROI of most of them are. Note: A Tax Cut does not impact ROI calculations at all because they are done (in general)above the EBITDA line. You can know the depreciation of the equipment - if you can figure out the tax treatement (which is changing in some ways as part of the bill). But the rest of it I, T and A have little or no direct impact from an individual deployment.
As to AT&Ts claim. It can not be proven. They could put it out to help in the press, but I have no idea what projects constitute that $1B. I note the changes from original press at the Carrier Plant in Indiana. I think any notion that there is direct linkage is PR and not reality.
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