AT&T to Spend Trump Tax Bump on Fiber, 5G 'Foundation'

Dan Jones
1/31/2018

This will be a year where AT&T uses its corporate tax-cut boost to spend more on deploying fiber and using spectrum to lay a foundation for 5G.

AT&T Inc. (NYSE: T) is expecting to spend around $23 billion on capital expenditure in 2018, CFO John Stephens said on the operator's fourth-quarter earnings call on Wednesday afternoon. Capex for the full year 2017 was just under $22 billion.

"Much of that is targeted for fiber deployment," Stephens said.

Otherwise, CEO Randall Stephenson said that AT&T will rapidly deploy 20MHz of 700MHz earmarked for the FirstNet and 40MHz of "fallow" mid-band spectrum, as well as start deploying the millimeter wave spectrum it has gained from FiberTower. (See AT&T's Mobile 5G Plan Leaves as Many Questions as Answers and AT&T's FiberTower Gives Up Many '5G' Spectrum Licenses.)

"This is our foundation for 5G," Stephenson said. Noting that the "hardened" core network it is rolling out for FirstNet is a basis for other next-gen services. (See AT&T to Make 5G Network Available to First Responders Too.)

The CEO reiterated that AT&T expects to be the first US operator to deliver commercial mobile 5G late in 2018. AT&T is continuing its fixed wireless 5G tests too, Stephenson said. (See AT&T Expects 5G in Late 2018 or Early '19.)

Stephenson said that ubiquitous broadband is the motivating factor for 5G, although he lauded connected cars and "super IoT" as future drivers too. "The opportunity to have nearly a nationwide... capability for broadband" is the crucial use case, he said.

The CEO shed a little light on what the 5G "mobile device" will be for the first 12 mobile markets. "It's not going to be a handset, because handsets just aren't available, think of this as a puck," he said. That at least sounds like a 5G-to-WiFi router to share the signal with other devices.

Stephenson lauded the huge corporate tax cut put into law late in 2017. "Our public policy makers pulled the greatest lever they had to stimulate growth," he said. The company expects its effective 2018 tax rate to be around 23%.

"The FCC returned us to light-touch regulation of the Internet," dropping net neutrality rules, Stephenson noted, touting another major public policy achievement for the Trump administration in 2017. "We're calling for an Internet Bill of Rights," he stated, hoping that Congress will legislate on net neutrality once and for all.

It wasn't all puppies and rainbows for AT&T, however, with the new administration. "Our top priority for 2018 is closing our deal with Time Warner," Stephenson said, stating that he was "surprised" that the DOJ decided to block the transaction. (See DoJ Sues to Block AT&T/Time Warner.)

The case will go to court on March 19.

For the year, AT&T reported revenue of $160.5 billion, compared to $163.8 billion a year earlier, because of a decline in wireline and wireless service revenues. Net income for AT&T throughout the year was $29.5 billion, versus $13 billion the year before, thanks to the operator being able to back-date the tax cuts passed in December.

AT&T is up 3.39% at $38.72 in after-hours trading. We'll have more stories coming up on the company's video and broadband results and plans.

— Dan Jones, Mobile Editor, Light Reading

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