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