AT&T CEO Randall Stephenson said that after meeting with President-elect Trump on January 12, just a week prior to Trump’s inauguration, he was left with an optimistic view about 2017 and the potential for corporate tax reform. That reform could, in turn, lead to AT&T investing more in its network.
“I was impressed. I was meeting with a CEO,” Stephenson said during a call with investors to discuss the company’s fourth quarter earnings and provide guidance for 2017. He noted that the two spoke “at length” about tax reform and regulatory reform.
Although it’s still uncertain what will happen in terms of tax reform and regulatory reform, Stephenson did say that the potential for a reduced corporate tax rate will lead to more investment, particularly in AT&T’s fiber and wireless networks. “If we get a line of sight to meaningful tax reform, we may think differently about areas to invest in,” he said. “There is no greater driver to economic growth than investment,” he added.
AT&T’s capital expenditures in 2016 totaled $22.4 billion, up from $20 billion in 2015.
Stephenson was reluctant to give specifics about exactly how the company would invest any extra funds, but he did say that it might, for example, move more quickly on deploying its wireless network into the 40 MHz of spectrum that it has acquired but has not used. “Would we deploy more quickly in that 40 MHz spectrum and maybe get faster mobile speeds?” he asked.
During the investor call, AT&T reiterated that the company has now virtualized 34 percent of its network, surpassing its goal of virtualizing 30 percent by year-end 2016. Stephenson touted this achievement, noting that the amount of virtualization and automation the company has added to its network is making the network much more cost efficient. “That big cost structure of running a big network and the IT costs year-over-year is down. And not inconsequentially.”
He added that the company is projecting $18 billion in free cash flow for 2017, up from $16.9 billion in 2016. He noted that the company is making progress toward achieving $20 billion in free cash flow but would not say when he expects that milestone to be achieved.
AT&T reported consolidated revenues of $163.8 billion for 2016 up 11.6 percent from $146.8 billion in the previous year. Fourth quarter the company reported consolidated revenues of $41.8 billion compared to $42.1 billion from the fourth quarter of the previous year. Overall, investors seemed pleased with the company’s performance. AT&T’s stock closed at $41.39 per share, up slightly from the previous day’s close of $41.36.