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AT&T CEO Hoping for a Trump Bump in 2017

Dan Jones
1/26/2017

AT&T's CEO expects a Trump bump in 2017 -- particularly if US corporate tax rate is cut -- but the service provider is not yet predicting increased capital expenditure for 2017.

AT&T is currently predicting total capital expenditure (capex) of around $22 billion for the year, in line with the 2016 spend. "Management provided 2017 capex guidance of $22 billion, ostensibly reflecting a 1.7% decline. We believe AT&T will continue to focus spending on consumer fiber broadband buildouts and selective portions of wireless," Simon Leopold from Raymond James Financial Inc. (NYSE: RJF) noted in an analyst report.

AT&T CEO Randall Stephenson says the capex figure doesn't take into account the corporate tax and regulatory cuts that the new US president wants to introduce. "I had the opportunity to meet with the [then] president-elect a couple of weeks ago. I have to tell you I was impressed; he's a CEO," Stephenson said on the fourth quarter earnings call Wednesday afternoon. (See AT&T Swears by DirecTV Now .)

The US corporate tax rate is currently 35%, which Stephenson says is the highest "in the developed world." Trump has said that he wants to cut it to 15%.

"If we get tax reform I would suggest that there could be upside to this guidance," the CEO said.

Much of that additional spending would be on wireless, the CEO said. The operator is currently bringing up 40MHz of AWS-3 and WCS spectrum for use, so that could happen faster. The service provider would also invest more to increase speeds on its 4G network.

AT&T Inc. (NYSE: T), along with Verizon Communications Inc. (NYSE: VZ), is also bidding to deploy the 4G first responders network. FirstNet will use 700MHz spectrum to deploy a public safety network interoperable between the emergency services.

AT&T's CEO says that if Ma Bell wins the deal and tax reforms happen, the operator is likely to deploy the network faster. "We get to another 20 MHZ of spectrum for public safety and secondary use," he says.

"What nobody has a really good handle on," yet, Stephenson admits, is possible border tariffs. Ironically, AT&T now has a booming business in Mexico. "Mexico continues to be a tremendous story," the CEO says.

"In a little more than a year we deployed 4G LTE to more than 270 million people in 160 markets," AT&T's CFO John Stephens said.

The No. 2 mobile operator in the US reported earnings of $2.4 billion, or $0.39 cents a share, on revenue of $41.8 billion.

— Dan Jones, Mobile Editor, Light Reading

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kq4ym
kq4ym
2/6/2017 | 10:09:55 AM
Re: AT&T Bump
It's all still a wild speculation whether there's going to be any significant tax or regulations changes. And while it's nice to hear about word the AT&T "is likely to deploy the network faster," or example, it's not anything I'd be betting on in the next year.
DanJones
DanJones
1/27/2017 | 12:44:53 PM
Re: AT&T Bump
LTE is 4G.
Joe Stanganelli
Joe Stanganelli
1/27/2017 | 12:11:05 PM
35%
The issue of reducing the corporate tax rate has been bandied about for years, but got a lot of attention during the Apple hearing in 2013, when senators were up in arms over the fact that Apple was using Irish subsidiaries to protect foreign capital from the US 35% tax rate instead of repatriating the money.

Which, from the perspective of an officer or director of Apple and their fiduciary duties by law, is exactly what they were supposed to do.

"You're not gonna get it at 35%.  You're gonna get zero," observed Sen. Rand Paul (R-Ky.)at that 2013 hearing, who proposed a reduction to 5% (far lower than Trump's proposed 15%).  "[M]oney goes where it's welcome.  Currently, our tax code makes money not welcome."

And, indeed, it's better for us to get something instead of nothing.  IMHO.  It'll be interesting to see the impact the reduction to 15% -- assuming it goes through (which it probably will) -- has.
freehe
freehe
1/26/2017 | 11:03:53 PM
4G Deployments
""In a little more than a year we deployed 4G LTE to more than 270 million people in 160 markets," AT&T's CFO John Stephens said."

This is a phenominal achievement providing service to 270 million people in a little over a year.

I am excited about the future work of AT&T.
freehe
freehe
1/26/2017 | 11:02:49 PM
AT&T First Responders Support
It is great the AT&T and other companies are working to provide faster service for first responders that is reliable and interoperable.

 
freehe
freehe
1/26/2017 | 11:01:05 PM
AT&T Bump
"The service provider would also invest more to increase speeds on its 4G network."

I am curious why AT&T is not focusing on 4G LTE which offers faster speeds especially since the industry is moving towards 5G.

 

 
freehe
freehe
1/26/2017 | 10:59:54 PM
Re: Time Warner deal
@msibley, good point. I am sure the president will change his tune. He loves being buttered up.
freehe
freehe
1/26/2017 | 10:58:50 PM
Re: Regulatory Relief is spelled Gut Net Neutrality
@JillAgain, good point. The money trail does tell an accurate story.
msilbey
msilbey
1/26/2017 | 4:35:06 PM
Time Warner deal
Stephenson's got a lot of sucking up to do if he wants to get his Time Warner deal passed. Trump is against it, but could change his tune if AT&T execs butter him up.
JillAgain
JillAgain
1/26/2017 | 3:06:54 PM
Regulatory Relief is spelled Gut Net Neutrality
AT&T has been chomping at the bit to get rid of net neutrality rules so they can open up more revenue streams from existing clients and force others to become customers or face slow lane treatment for their service delivery. 

Follow the money! It works every time.
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