AT&T and Comcast are among a handful of companies touting plans to take proceeds from the recently passed legislative tax reform and invest them into their operations and employees’ pockets.
In a corporate blog post, AT&T indicated that once the legislation is signed into law, it will invest an additional $1 billion next year in its operations across the United States. It also pledged to pay a “special $1,000 bonus” to more than 200,000 of its domestic employees.
“Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” said AT&T CEO and Chairman Randall Stephenson in a statement. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”
The tax reform plan, which is only awaiting a signature from President Donald Trump, is set to cut the corporate tax rate from 35 percent to 20 percent. AT&T is on track to post around $160 billion in revenues for 2017, with plans for around $21 billion in CapEx.
Speaking at a recent investor conference, AT&T CFO John Stephens said economic studies have shown that 7,000 jobs are created with every $1 billion in new investment. AT&T counted 256,800 total employees at the end of the third quarter fiscal 2017, which was down 6 percent from the previous year.
The telecom giant had previously stated plans to increase its domestic investment should lawmakers enact tax reform. Stephenson at that time said the increased investment would target its fiber deployment.
AT&T has not released forecasts for 2018 CapEx, but is expected to divert some of those funds to its 5G network deployment plans. Those efforts should accelerate now that the 3GPP standards body has released specifications for the non-standalone 5G New Radio (NR) technology set to be core in initial 5G deployments.
Accenture earlier this year released a study that showed the deployment of 5G networks could create up to 3 million jobs and add approximately $500 billion to U.S. gross domestic product through direct and indirect potential benefits. Specific to operators, the report estimates as much as $275 billion in investments over a seven-year period that could create 350,000 new construction jobs and about 850,000 total domestic jobs.
AT&T’s investment plan also comes as the operator is in the midst of a contentious $108 billion acquisition of Time Warner. That proposed deal has drawn a lawsuit from the U.S. Department of Justice, which is trying to block the transaction claiming it would harm competition and consumer choice.
Cable giant Comcast followed AT&T’s lead, announcing its own plans to “award special $1,000 bonuses to more than 100,000 eligible frontline and non-executive employees.” Comcast NBCUniversal CEO Brian Roberts said the move was tied to both the tax reform and the FCC’s recent push around net neutrality.
Roberts also said the company would invest more than $50 billion over the next five years in its infrastructure. The company is on track to spend around $9.5 billion on CapEx this year, thus Roberts’ forecast would be in line with current spending trends.